Broadcom's VMware Deal Faces EU Legal Scrutiny Amid Cloud Market Dominance Concerns

Recently, Broadcom (AVGO) has shown positive growth, with an increase of 0.51% last week, continuing a three-day streak leading to a 4.16% rise over the past three days. The company's stock has increased by 2.41% over the week and 25.8% year-to-date, supported by a market capitalization of 13648.53 billion USD. As of July 22, 2025, Broadcom closed at $278.59, down by 3.34% on the day with a 0.84% decrease over the past five trading days. Despite a July gain of 1.07%, the stock's performance remains impressive with a 72.97% increase over the past 52 weeks.

Broadcom is facing legal challenges regarding its $61 billion acquisition of VMware, as the European Cloud Infrastructure Providers' organization (CISPE) has brought the matter to the European Union's General Court. CISPE argues that the European Commission erred in allowing the transaction without imposing any conditions to prevent Broadcom from abusing its market dominance. Concerns have arisen about Broadcom's alleged harmful conduct, including terminating existing contracts and imposing costly new licensing terms, which potentially harm European cloud computing users.

The transaction was conditionally approved by the European Commission in July 2023, with Broadcom offering a comprehensive set of access and interoperability commitments to address antitrust concerns. Despite these measures, worries about Broadcom's practices have persisted, particularly with regard to increasing prices and implementing restrictive licensing terms. Francisco Mingorance, CISPE's Secretary General, emphasized the impact of these practices on the vast majority of European organizations utilizing cloud technology, urging the European Commission to reassess its decisions.

The General Court in Luxembourg is set to conduct hearings on the issue, ultimately deciding whether the European Commission should revisit its approval decision. CISPE's legal challenge, based on alleged errors in the competition assessment process, has been formally submitted within the permissible appeal period.

Alongside this legal battle, CISPE highlighted Broadcom's actions post-acquisition, such as unilaterally terminating existing contracts with little notice and imposing cumbersome new licensing conditions, significantly increasing costs and demanding multi-year commitments. These developments have intensified the exclusion of smaller cloud service providers from VMware-based cloud services, complicating the landscape of secure and flexible European cloud solutions.

CISPE continues to voice its concerns, noting repeated warnings to the commission and continued efforts for constructive dialogue with Broadcom to secure fairer access conditions for its members. However, CISPE's calls have gone largely unheeded, leaving many European organizations, including hospitals, universities, and municipal bodies, overwhelmed by costs and rigid long-term commitments, thereby jeopardizing their cloud infrastructure's flexibility and affordability.

The outcome of CISPE's appeal remains uncertain, given the complex process involved in reconsidering merger approvals at the EU level. Nevertheless, CISPE aims to mitigate some of Broadcom's licensing conditions, offering its members a pathway to more equitable terms regarding access to vital VMware software.