Europe greenlights Broadcom's $61B VMware buy

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The European Commission has granted conditional support for nan acquisition of VMware by Broadcom.

"Broadcom provided nan European Commission pinch a exertion entree remedy that preserves interoperability, a halfway rule that would not person changed arsenic a consequence of this transaction," Broadcom said successful a statement issued today. "Broadcom did this to afloat reside nan concerns expressed by nan European Commission, and Broadcom welcomes nan Commission's determination to judge this entree remedy."

Those "concerns" centered connected nan imaginable for nan 2 companies to "restrict title successful nan marketplace for definite hardware components which interoperate pinch VMware's software." The Commission named Network Interface Cards, Fiber Channel Host-Bus Adapters, and retention adapters, and imagined a world successful which Broadcom made only its ain versions of specified hardware compatible pinch VMware's stack.

The Register rated nan anticipation of specified action arsenic very slim because VMware has ever been neutral towards hardware providers (although Dell did get friends pinch benefits position during nan company's tenure arsenic Virtzilla's owner).

Broadcom's "remedy that preserves interoperability, a halfway rule that would not person changed arsenic a consequence of this transaction," appears to truthful correspond a committedness not to do thing nan institution ne'er planned to do.

An organizational separation betwixt nan squad moving connected Broadcom's HBAs and nan squad successful complaint of third-party certs and method support was besides agreed pinch nan Commission.

The determination intends Broadcom's oft-stated extremity of completing nan transaction earlier November 1 remains successful play, though US and UK regulators are yet to person their opportunity connected nan matter.

In a statement, Margarethe Vestager, executive veep successful complaint of title argumentation astatine nan EC, said: "Broadcom holds a very beardown position successful nan marketplace for nan proviso of definite hardware components. VMware is simply a cardinal server virtualisation package provider. By acquiring VMware, Broadcom could restrict aliases degrade interoperability betwixt VMware's starring server virtualization package and immoderate competing hardware components. But nan commitments offered by Broadcom will alteration its only rival Marvell, to proceed competing connected adjacent footing and guarantee a akin protection for immoderate early entrants."

The UK's Competition and Markets Authority (CMA) expressed akin concerns astir nan deal. Broadcom's willingness to work together to a remedy bodes good for its negotiations pinch nan CMA, which has pledged to present its verdict connected nan matter by nan extremity of August.

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The United States' Federal Trade Commission (FTC) has said little astir its imaginable concerns pinch nan deal, but Broadcom is intelligibly consenting to make a lawsuit for its passage.

Which astir apt brings VMware users person to contemplating what a Broadcom-owned VMware would mean.

Broadcom has promised to boost VMware's R&D fund by $2 cardinal to create caller hybrid multicloud offerings. Broadcom has besides promised that acquiring VMware will present an other $8.5 cardinal of pro forma EBITDA wrong 3 years of nan woody closing.

Broadcom has accrued profits astatine its erstwhile package acquisitions by cutting costs and reducing R&D. Exactly really it plans to walk much and summation profits astatine VMware remains unknown.

And according to expert patient Gartner, that uncertainty has plentifulness of VMware customers worried. In its May Market Guide for Server Virtualization, which covers VMware's halfway offering, Gartner rated nan acquisition a "disruption" to nan marketplace that "will thrust 50 percent of enterprises [to] reevaluate their server virtualization needs and research replacement server virtualization technologies (up from 10 percent successful 2022)."

The archive besides recovered that server virtualization is waning, albeit slowly.

"Despite unreality migration and instrumentality adoption, 70 percent of datacenter x86 workloads will proceed to usage hypervisor-based virtualization done 2027 (down from astir 80 percent successful 2020)," nan archive states.

VMware of people plays successful galore much markets than server virtualization. ®