Broadcom’s acquisition of VMware hit another snag with the EU opening an investigation into the proposed deal.
Broadcom and VMware reached a $61 billion deal in May 2022 that would see Broadcom purchase the virtualization company. The deal immediately sparked concern for VMware’s future, given Broadcom’s reputation for slashing expenses and forcing its subsidiaries to run incredibly lean operations.
In November 2022, the UK’s Competition and Markets Authority (CMA) announced an investigation into the deal, and now the EU Commission has announced its own investigation.
“Broadcom, a major supplier of hardware components, is acquiring VMware, a key server virtualisation software provider,” said Margrethe Vestager, Executive Vice-President in charge of competition policy. “Our initial investigation has shown that it is essential for hardware components in servers to interoperate with VMware’s software. We are concerned that after the merger, Broadcom could prevent its hardware rivals to interoperate with VMware’s server virtualisation software. This would lead to higher prices, lower quality and less innovation for customers and consumers.
In particular, the Commission is worried that Broadcom may scale back some of the services that VMware offers to third-party companies, choosing to bundle them with its own hardware exclusively.
Given the scrutiny tech acquisition have been under of late, the likelihood of Broadcom’s deal moving forward in the face of two separate investigations is certainly in question.