European cloud industry group CISPE has formally accused the European Commission of failing to properly assess competition risks when it approved Broadcom’s roughly $61 billion acquisition of VMware, arguing the regulator’s clearance effectively gave Broadcom a “blank cheque” to raise prices, lock in customers, and squeeze cloud providers. CISPE’s complaint to the General Court of the European Union alleges that Brussels ignored clear warnings about Broadcom’s incentives to aggressively monetize VMware’s dominant position in server virtualization software, pointing to steep price hikes, forced multi-year contracts, and increased bundling since the merger closed. The group claims the European Commission committed errors in law and competitive assessment by overlooking these risks and has rejected the regulator’s defence of its approval, pushing for annulment of the decision and potential re-examination of the transaction under current market conditions. Broadcom disputes the allegations, and the Commission has said it will defend its earlier decision.
Sources: IT Pro, The Register
Key Takeaways
– Regulatory oversight under fire: CISPE claims the European Commission failed to properly scrutinize or mitigate competitive harms when approving Broadcom’s acquisition of VMware, leading to alleged anticompetitive outcomes in Europe’s cloud market.
– Market impact concerns: The complaint highlights substantial price increases, tighter contractual lock-in, and bundling of products post-acquisition, with European cloud providers and their customers bearing the cost.
– Legal challenge underway: CISPE has responded to the Commission’s defence and is pushing the EU General Court to annul the merger approval, which could reopen regulatory scrutiny and create legal and market uncertainty for Broadcom.
In-Depth
In a significant escalation of regulatory and industry pushback against the European Commission’s handling of major technology deals, the Cloud Infrastructure Services Providers in Europe (CISPE) has taken its legal challenge over Broadcom’s acquisition of VMware to the EU’s General Court, arguing that the Commission’s 2023 approval of the roughly $61 billion deal was fundamentally flawed. At the heart of the dispute is an accusation that the Commission failed to adequately assess or address the competitive ramifications of the acquisition, effectively handing Broadcom what CISPE describes as a “blank cheque” to raise prices, lock in customers, and squeeze cloud service providers across Europe.
Broadcom’s purchase of VMware, one of the most consequential consolidation moves in the enterprise software and cloud computing space, drew scrutiny from regulators globally. While approval was ultimately secured in key jurisdictions, including the European Union, the merger has since become a focal point for industry complaints about market power and anticompetitive conduct. According to CISPE, a trade association representing numerous cloud providers, the European Commission looked at the deal “through half-closed eyes,” ignoring clear warning signs about Broadcom’s incentives to monetize VMware’s already dominant position in the server virtualization market rather than relying on organic growth or genuine efficiencies.
CISPE’s formal complaint, lodged in July and recently bolstered with a response to the Commission’s defence, argues that warnings from customers and industry associations were overlooked. The group claims that Broadcom’s public targets for dramatically higher earnings before interest, taxes, depreciation, and amortization (EBITDA) for VMware in a relatively slow-growth market could only be achieved through aggressive pricing strategies, bundling of products, and tighter contractual lock-ins—a prediction that appears to have come true according to members of CISPE, who report significant cost increases and more rigid conditions for cloud providers since the merger.
From a conservative regulatory perspective, this clash highlights enduring tensions over how antitrust authorities balance the economic arguments for large-scale mergers against the real-world effects these transactions can have on competition and pricing. Broadcom, for its part, has categorically rejected CISPE’s allegations, and the European Commission has maintained that it will defend its decision, underscoring confidence in its analytical framework and the outcomes of its merger review process.
Yet, if the General Court were to side with CISPE and annul the Commission’s approval, the consequences could be wide-ranging. Beyond creating immediate legal and regulatory uncertainty for Broadcom, such a ruling would likely compel a reassessment of how antitrust risks are evaluated in high-stakes technology deals, potentially leading to stricter scrutiny of future acquisitions in the cloud and software sectors. Investors, customers, and competitors alike would have to navigate a landscape where regulatory second-guessing of past deals becomes a persistent risk factor.
CISPE’s fight reflects broader unease among European cloud providers who feel squeezed by dominant players and insufficient safeguards from regulators. Their legal challenge is as much about immediate competitive harms as it is about setting a precedent for tougher enforcement of merger rules in the digital economy. In markets as dynamic and strategically vital as cloud computing and virtualization, regulatory vigilance and the perceived willingness to correct past approvals could play an outsized role in shaping competitive balance and costs for enterprises across the continent. If the court finds merit in CISPE’s claims, it may signal a recalibration of antitrust policy that prioritizes competitive dynamics and consumer outcomes over deal facilitation—or at least demands a more rigorous justification for large technology transactions that reshape market structures.