Fresh from its recent successful dealings with Microsoft, Cloud Infrastructure Services Providers in Europe (CISPE) is attempting to stop Broadcom's acquisition of VMWare.
The alliance of European cloud providers has filed an appeal with the European General Court over the European Commission's approval of the deal, calling for it to be annulled.
Along with around ten other competition authorities, including those in the UK, South Korea, Japan and China, the Commission gave final approval to the $69 billion acquisition in May.
But while it acknowledged that the takeover posed significant risks to competition it didn't, said CISPE, impose any conditions on Broadcom to limit its market dominance.
This, said CISPE in its complaint, is an error in law and amounts to a 'manifest failure' in the competitive assessment process.
"For the past two years, CISPE has consistently raised alarms with the European Commission - particularly with DG Competition - over Broadcom’s unfair software licensing practices," said CISPE.
"Despite numerous meetings and thorough responses to detailed requests for information, no substantive action was taken to support either European cloud service providers or their customers."
Since the deal was finalized, Broadcom has been terminating existing customer contracts – often with only a few weeks' notice – and imposing new ones. In many cases, CISPE has claimed, this has meant an increase in licensing costs of up to 15 times, with customers also trapped in unnecessarily long contracts.
CISPE added that Broadcom’s new licensing terms could exclude smaller cloud providers from purchasing and reselling VMware-based cloud services -important tools for delivering secure, flexible and European-based cloud solutions.
Under the new terms, the CSP Program is to become invite-only from November, with many small or medium-sized firms shut out.
“The dominance of VMware software in the virtualisation market means that unfair new licensing terms enforced by Broadcom affect almost every European organisation using cloud technology,” said Francisco Mingorance, secretary general of CISPE.
“Not just cloud service providers, but hospitals, universities, and municipal authorities are all now facing unaffordable bills and rigid long-term commitments that jeopardise the flexibility and affordability of their cloud infrastructure. The Commission was warned this would happen, yet it stood by. It must now reconsider its decision.”
No date has yet been set for a court hearing, however a Broadcom spokesperson told ITPro: "Broadcom strongly disagrees with these allegations. The European Commission, along with twelve other jurisdictions around the world, approved our acquisition of VMware following a thorough merger review process, and we will uphold the commitments made to the Commission at that time. We continue to bring our customers better choices and solutions to address their most complex technology challenges."
CISPE last week scored a victory over Microsoft in a similar dispute over its software licensing practices.
Its members will now be allowed to offer Microsoft software to customers on a pay-as-you-go basis, with stronger privacy for customers of European cloud providers.
This, it said, will bring the pricing for products including Windows Server and SQL Server more in line with those of Microsoft’s own cloud platform, Azure.
