Broadcom-VMware On Verge of Go-Ahead from EU

(Update: The European Commission gave its conditional approval for the acquisition on July 12.)

The $61 billion, much-drawn-out Broadcom-VMware pairing is poised for conditional antitrust approval from the European Commission.

According to an unnamed Reuters source, Broadcom will receive its long-awaited go-ahead on Wednesday. It remains unclear what conditions Broadcom must meet to clinch full approval.

Broadcom has been waiting for this development for about a month now.

EU regulators have for the past year pushed back on the proposed Broadcom-VMware union over fear that Broadcom would restrict competition in the region. However, per Reuters, U.S. chipmaker Broadcom last month successfully assuaged those concerns around its Fibre Channel Host-Bus Adapters. According to Reuters, Broadcom agreed to an interoperability remedy to rival Marvell Technology. The adapters connect servers to storage located outside the server on a storage-area network using the fiber channel protocol.

Broadcom-VMware More About Cloud than Hardware

But Broadcom-VMware is really about Broadcom entering the cloud computing space. The company aims to diversify into enterprise software and sees VMware as its path to achieving that. At the same time, VMware arguably needed some help as it faced mounting challenges around moving from hardware to software and “as a service” business models.

Techaisle’s Anurag Agrawal

“VMware was in a quandary,” Techaisle’s Anurag Agrawal told Channel Futures in May 2022. “Customer demands have been shifting from virtualized environments to cloud-native. The center of cloud gravity has moved to the hyperscalers. Cloud has fundamentally reshaped the consumption of IT resources. By providing buyers with variable-cost access to software, software development environments, core processing, storage resources, and even specialized skills, the cloud’s anything-as-a-service model prompts a massive shift in IT spending from traditional products to on-demand alternatives. As a result, the transition from conventional products to ‘aaS’ has been fundamentally disruptive to VMware.”

Broadcom-VMware: A Year of Hurdles

Yet ever since declaring its intent for VMware, Broadcom has faced hurdles. CEO Hock Tan has written several blogs aiming to clarify the company’s position on everything from competition and cloud sovereignty to channel strategy and relationships. He also met with EU regulators in person this summer.

The U.S. Federal Trade Commission and the UK’s Competition and Market Authority have yet to tip their hands on whether they’ll follow their peer’s lead and also approve Broadcom-VMware. The latter, like the European Commission regulators, has expressed uncertainty about Broadcom’s hold on the server market with VMware under its wing.