The European cloud service providers’ association also cautioned that challenges remain in its efforts to push Microsoft toward fairer software licensing practices..

Figure 1. CISPE Issues Urgent Alert on Broadcom's VMware Licensing Changes".

The European Cloud Competition Observatory (ECCO), a body set up by the Cloud Infrastructure Services Providers in Europe (CISPE) to ensure fair cloud licensing practices across the region, has sharply criticized Broadcom this week for failing to meet expectations. Figure 1 shows CISPE Issues Urgent Alert on Broadcom's VMware Licensing Changes".

Launched in November as part of an anti-competition agreement with Microsoft from July 2024, ECCO was also tasked with monitoring other major software companies, such as Broadcom/VMware, and publishing its findings.

ECCO is composed of CISPE members alongside customer organizations like Cigref, representing French CACI40 CIOs, and Beltug, representing Belgian CIOs, who observe as physical representatives. The group uses a Red/Amber/Green (RAG) rating system to assess progress on key issues:

• Green = On-Track: "significant and sufficient progress is being made;"
• Amber = Off-Track: "concerns about stalled progress or unresolved barriers;"
• Red = Critical: "insufficient progress at the time of the report."

Broadcom: Critical Rating Assigned

In a report released on Tuesday, Broadcom’s status was marked as Red/Critical, with the European Cloud Competition Observatory (ECCO) urging for a formal investigation into the company’s “unfair software licensing practices.”

The report highlighted that since March 2024, CISPE has been calling on Broadcom to reconsider its drastic changes to VMware license agreements. These changes have been deemed "brutal and unacceptable" by many of CISPE's members and cloud customers across Europe.

The authors stated that most affected parties were forced to accept new terms that locked them into steep license fees for a minimum of three years due to the inability to replace VMware software needed to serve their customers. ECCO echoed the call for an official investigation into these practices.

Dario Maisto, a senior analyst at Forrester who focuses on public cloud vendors in EMEA, remarked on Wednesday that ECCO’s criticism of Broadcom “leaves little to be said” due to the vendor’s reported lack of collaboration. Maisto emphasized that the issues surrounding Broadcom extend beyond VMware's acquisition, pointing out changes to VMware's product bundling, licensing, pricing, and market strategy that have raised concerns for Forrester clients for several months. Maisto noted that these concerns have been voiced not only by competitors but also by end-users, which could eventually pressure Broadcom into action.

In response, a Broadcom representative defended the company, stating, “We provide simplified licensing under a model that all leading enterprise software companies offer,” and emphasized that their customer retention rate has remained stable, proving the value, they deliver.

Microsoft Rating: Amber

ECCO, created following a Memorandum of Understanding (MOU) between CISPE and Microsoft in July, assigned Microsoft an Amber rating in its latest report. The report acknowledged that both parties seem committed to resolving outstanding issues, with Microsoft dedicating considerable resources, including engineering, legal, and senior leadership efforts, to advancing the partnership.

However, the report also noted that there was insufficient progress on the hoster product from September 2024 to January 2025. Concerns were raised by CISPE members that too much emphasis had been placed on the development of Azure Local as a solution to meet MOU requirements. The report suggested that teams working on Azure Local may not fully understand the legal requirements of the MOU, potentially leading to misaligned priorities.

CISPE’s release indicated that Microsoft’s progress is rated Amber, meaning that while some areas are progressing, there are still gaps in meeting expectations set by CISPE members in the July 2024 agreement. The report emphasized the need for further advancement on business opportunities that Microsoft had committed to collaborate on as part of the agreement, which had been central to CISPE withdrawing its competition complaint to the European Commission.

Dario Maisto from Forrester noted that while there has been some progress in addressing competition complaints, the pace of resolution may not be fast enough to keep up with emerging issues. He also pointed out that new challenges related to digital sovereignty requirements and AI investments in Europe will likely push Microsoft to accelerate certain collaborations. Maisto warned that while these changes are on the horizon, they may not become fully realized in the near future.

Reference:

1. https://www.networkworld.com/article/3823450/cispe-raises-red-alert-over-broadcoms-vmware-licensing-changes.html
2. https://www.schneider.im/vmware-by-broadcom-portfolio-simplification-and-transition-to-subscription/?utm_source=chatgpt.com

Cite this article:

Priyadharshini S (2025),"CISPE Issues Urgent Warning on Broadcom’s VMware Licensing Changes",Anatechmaz ,pp.126