VMware by Broadcom Might Settle AT&T Lawsuit

VMware by Broadcom might avoid a protracted court battle and settle a lawsuit filed by AT&T.

Such a move also would circumvent the threat of a preliminary injunction against the cloud software provider, which, under Broadcom, has threatened to pull support from the multibillion-dollar telco. AT&T says such a move would endanger national security and first responders.

On Friday, attorneys for both companies jointly notified the judge, Jennifer G. Schecter, that they have been “engaging in settlement discussions,” according to the Oct. 11 letter. 

In fact, the lawyers said they believe they have made enough progress toward a settlement that they are asking Schecter to adjourn the oral arguments that are on the docket for Tuesday. They want “to permit the parties additional time to seek a resolution,” the letter reads. If Schecter is amenable, the attorneys hope to reconvene in court on or around Oct. 22. 

That’s because VMware by Broadcom already agreed to “temporarily extend support services” until Oct. 21, as the lawyers pointed out in the letter. However, the representatives on both sides of the AT&T lawsuit are prepared to use the allotted court time on Oct. 15 to “discuss an alternative date for oral argument on AT&T’s motion should it be necessary,” they wrote.

Related:The Broadcom VMware Acquisition: A Complete Timeline

How the AT&T Lawsuit Against VMware by Broadcom Came About

The request to postpone oral arguments marks the latest major development in the saga of the AT&T lawsuit against VMware by Broadcom.

AT&T filed its complaint on Aug. 29, alleging that the chipmaker seeks to breach its VMware contracts, putting first responders, other critical government services and national security at risk. 

AT&T says Broadcom is retroactively trying to force it to shift from perpetual to subscription software licensing, which would cost hundreds of millions of dollars. AT&T has refused to comply with Broadcom’s demands and tried to invoke an extension of its support contract, which it says Broadcom (then VMware) and AT&T agreed to in August 2022. 

Conversely, VMware by Broadcom accuses AT&T of “sensationalism,” saying it failed to do its due diligence in renewing its support services when it had the chance and now is resorting to a “parade of horribles” to protect itself.

Along the way, both sides have tried to convince Schecter to seal their documents. Schecter mostly has refused, stating that “there is no good cause to seal much of [the information] because the public's presumptive right to properly understand the details of this case and the arguments made on the motion for a preliminary injunction outweighs the harms from disclosure.” Some of the filings contain redactions and some have undergone sealing, but the majority remain open for public consumption.

Related:‘Bait and Switched’: Broadcom Blames AT&T in VMware Support Fight

AT&T filed its lawsuit in New York State Supreme Court. So far, the suit represents the most public fallout Broadcom has experienced from its decisions to switch VMware to subscription licensing, and trim the VMware product line and channel program. The partner and customer uproar was swift and has remained high. Interestingly, in its new Magic Quadrant report for Distributed Hybrid Infrastructure, analyst firm Gartner notes that, by 2026, "50% of enterprises will initiate proofs of concept for alternative ... products to replace their VMware-based deployments." That figure jumped from 10% in 2024, Gartner said.