European Regulators Flag Broadcom for Cloud Licensing Crackdown

Broadcom has received a severe rebuke from the European Cloud Competition Observatory, or ECCO, which assigned the company a critical status in its latest market analysis. The organization argues that Broadcom’s recent actions have significantly worsened the competitive landscape for cloud infrastructure in Europe. The report highlights a pattern of conduct that ECCO describes as an attempt to restructure the market in Broadcom’s favor, potentially undermining the viability of local cloud service providers.

The criticism centers on licensing practices that many in the industry view as punitive. According to the watchdog, these changes create significant barriers for European companies trying to operate or scale their cloud services. While other major tech players have seen improvements in their standing, Broadcom faces the harshest judgment, with the group warning that current trends threaten not just specific businesses, but the integrity of competition enforcement in the region.

Reseller program shutdown creates supply gaps

A primary point of contention is the abrupt termination of Broadcom’s main reseller program for VMware cloud partners. This move effectively cut off European cloud companies from offering virtualization services that are essential for large-scale deployments. The ECCO notes that this action denied vast sections of the European cloud ecosystem access to a crucial product for which there are no immediate alternatives.

The practical impact of this decision is severe. Virtualization software is complex, and replacing it is not a simple task. The report warns that re-engineering systems to use alternative software is a multi-year project that can cost millions of euros. By removing the ability to resell these services, Broadcom has created a bottleneck that forces customers to either accept new terms or face a difficult and expensive transition.

Licensing restrictions drive up operational costs

Beyond the reseller issue, the report details significant changes to how licenses are purchased and used. Customers are now restricted to a small group of certified European companies if they wish to bring their own licenses to the cloud. This limitation reduces choice and can lead to higher prices, as it creates local monopolies where only a few providers can offer the service.

Pricing models have also shifted in a way that reduces flexibility. Previously, cloud providers could provision capacity and reconcile usage later, a method known as overage-based pricing. Broadcom has eliminated this option, requiring companies to pre-commit to specific core counts. Industry members report that license prices have increased by up to ten times compared to the period before Broadcom acquired VMware, imposing heavy commercial constraints on those delivering cloud services.

SAP faces moderate compliance concerns

While Broadcom faces the most severe criticism, SAP has been flagged with an amber status, indicating escalating concerns rather than a critical failure. The issues here relate to newly introduced restrictions on application programming interfaces and changes to licensing for agentic artificial intelligence. The ECCO suggests these moves could stifle competition by limiting how other developers and partners can interact with SAP’s platforms.

In contrast, Microsoft has maintained a good standing in the report, showing progress in addressing previously raised concerns. The divergence in ratings highlights a specific struggle with Broadcom’s strategy. The ECCO, which includes members from the Cloud Infrastructure Services Providers of Europe, emphasizes that the goal of these assessments is to ensure a fair and competitive digital market. The report serves as a warning to regulators that without intervention, the dominance of certain vendors may continue to distort the European cloud market.