VMware licensing change since acquisition by Broadcom

On 22 November 2023, Broadcom Inc. completed the acquisition of VMware for $61 billion.^[1] Perpetual licenses for the software were ended and changed to a subscription-based model.^[2] Customers report that this new model results in higher overall pricing for their use of VMware, with documented increases ranging from 800% to 1,500%.^[3] Several notable businesses who are customers of VMware have started legal action against Broadcom.

Broadcom announced its intent to acquire VMware on May 26, 2022, for approximately $61 billion in cash and stock.^[4] The acquisition completed on November 22, 2023, following regulatory approvals from multiple jurisdictions.

In 2025, Broadcom initiated the second phase of its VMware consolidation.^[5] The CEO stated that "more than 90% of VMware's largest 10,000 customers have shifted from perpetual licenses to the subscription-based" model, though he clarified that purchasing licenses does not mean full deployment.^[5]

On December 11, 2023, Broadcom announced it would immediately stop selling perpetual licenses and discontinue support renewals for existing perpetual license holders.^[6] The company reduced VMware's portfolio from approximately 200 products to four core subscription bundles: VMware Cloud Foundation (VCF) and VMware vSphere Foundation as primary offerings.^[7]

Besides the new pricing models since the acquisition, Broadcom increased the minimum amount of cores from 16 to 72 cores in April 2025, which must be paid irrespective of usage of the 72 cores.^[8][9] However, following a ton of industry backlash, Broadcom completely reversed this decision in April 2025.^[10] In addition, being late with license renewal causes an additional 20% cost penalty.^[9]

CEO Hock Tan explicitly stated that while VMware has 300,000 customers, Broadcom sees "the top 10,000 as being people where it makes a lot of sense, derive a lot of value in deploying private cloud using VCF."^[11] This strategic narrowing focuses on approximately 600 strategic enterprise accounts while pushing smaller customers toward alternatives.

Beginning in May 2025, Broadcom began sending cease-and-desist letters to customers using perpetual licenses without active support contracts.^[12] Customers were informed they must immediately discontinue use of VMware products unless they transition to subscription licensing.^[13]

VMware customers must now commit to three-year subscription terms for license renewals, a requirement that has generated significant customer resistance.^[14]

Broadcom argues that they have listened to their customers. In an April 2024 blog post, CEO Hock Tan stated that subscription licensing "eliminates incentives" for confusing pricing practices common in the software industry.^[15] He also announced that customers needing additional time for migration could receive support extensions, though specific terms were not disclosed.^[16]

On Friday, June 27, 2025, the District Court of The Hague granted Rijkswaterstaat's (RWS) request in case ECLI:NL:RBDHA:2025:11349.^[17] Broadcom must continue to provide RWS with support for a period of 2 years under the existing conditions and price of €1,765,191 annually, with penalties of €250,000 per day for non-compliance up to €25 million maximum.^[18]

The judge ruled:

"Unlike Broadcom et al. have stated, there was [thus] no question of free commercial negotiations between two large professional parties; one could say that RWS was in a bind. The judge ruled that RWS must be allowed to part ways with VMware/Broadcom and still receive support during that process. By failing to do so, Broadcom acts in violation of the care that is owed to RWS in social traffic."^[18]

The court noted that RWS manages critical infrastructure including Dutch tunnels, locks, and bridges, and faced an 85% price increase from Broadcom.^[19]

On July 30, 2025, the trade body for European Cloud providers CISPE started legal action against the European Commission.^[20] The legal action focuses on the acquisition approval by the EU Commission; arguing the remedies taken were "irrelevant to the real threat."^[20] CISPE seeks to annul the Commission's approval, citing "errors in law and manifest failures" in competitive assessment.^[21]

AT&T filed suit against Broadcom in August 2024, alleging a 1,050% price increase from approximately $2 million to over $20 million annually for 75,000 virtual machines.^[22] The lawsuit documented that migrating away from VMware would cost AT&T an estimated $40-50 million.^[23] AT&T warned of potential impacts to critical services including FirstNet emergency communications.

On November 21, 2024, AT&T reached a settlement-in-principle with Broadcom.^[24] The terms of the settlement were not disclosed, but it is clear that AT&T is moving away from doing business with Broadcom.^[24] In the case, Broadcom argued to the court that they did not have to give support as AT&T did not renew their license.

On September 3, 2025, Tesco filed suit against Broadcom seeking £100 million in damages.^[25] The UK's largest supermarket chain warned of potential disruption to UK and Ireland food supplies, as it operates 40,000 virtual workloads supporting point-of-sale systems, inventory management, and logistics.^[26] Tesco alleges Broadcom breached perpetual license contracts valid until 2026 with extension options, denied promised software upgrades, and restricted security patches to subscription customers only.^[27]

In March 2025, VMware filed copyright infringement charges against Siemens, alleging the industrial giant uses "thousands" of unlicensed VMware products.^[28] VMware claims Siemens requested support renewal in September 2024 for products never properly licensed and refused to submit to an independent software audit.^[29]

The European Commission approved the acquisition in July 2023 under case number M.10806 with significant conditions including 10-year commitments for technology access, interoperability APIs, and source code access to competitors.^[30]

On July 22, 2024, the European Commission initiated investigations, receiving complaints about the licensing model after Broadcom acquired VMware.^[31] The European Cloud Competition Observatory assigned Broadcom "red" status for critical anticompetitive risk in May 2024.^[32]

China's State Administration for Market Regulation (SAMR) granted conditional approval with 10-year monitoring requirements prohibiting unjustifiable bundling and requiring maintained compatibility with third-party hardware.^[33] Multiple Chinese companies have since filed new complaints alleging post-acquisition abuse of dominance.^[34]

The Japan Fair Trade Commission launched an investigation in September 2024 focusing on forced bundling practices, conducting office raids in Tokyo.^[35]

The UK Competition and Markets Authority provided unconditional clearance after examining over 250,000 internal business documents, concluding potential benefits of restricting competitors would be outweighed by loss of business.^[36]

Many independent surveys & documented cases confirm the 800% to 1,500% price increase range affecting VMware customers globally. The European Cloud Competition Observatory (ECCO) found that their members' costs for VMware increased 8 to 15 times compared to the previous pricing model.^[37] A CloudBolt Software survey of 300 VMware customers found 75% expect price increases exceeding 100%, with many reporting actual increases between 500% and 1,200%.^[38]

A Civo survey of 1,000 VMware customers found that 48.7% have already had to spend more to access the same features, with 99% expressing concern about Broadcom's actions.^[39]

The reliance on VMware is high across many different sectors and is not something that can easily be replaced by other software.^[40] Despite this, major migrations are occurring:

• Computershare is migrating all 24,000 virtual machines to Nutanix AHV after receiving quotes for 10x to 15x price increases.^[41]
• GEICO migrated to OpenStack to avoid vendor lock-in.^[42]
• Beeks Group moved 20,000 VMs to the OpenNebula open-source platform after facing a 10x price increase.^[43]

Industry research shows 52% of VMware customers are considering leaving the platform, with 56% planning to decrease VMware use over the next year.^[44]

Despite widespread customer dissatisfaction, Broadcom reports strong financial performance from the VMware acquisition. Infrastructure software segment revenues reached $6.8 billion in Q3 2025, up 17% year-over-year, with VMware contributing $3.8 billion quarterly.^[45] The company achieved $2.7 billion in annualized booking value and aims to grow VMware's revenue from $4.7 billion to $8.5 billion within three years.^[46]

Broadcom cut VMware's quarterly operating costs from $2.4 billion to $1.2 billion while increasing margins from below 30% to 70%.^[47]

The disruption has created opportunities for VMware competitors:

• Nutanix emerges as the primary beneficiary, with its Net Score jumping from single digits to 40% and adding 630 new customers in its most recent quarter.^[48]
• Microsoft Azure Stack HCI now holds nearly 38% of virtualization market share versus VMware's 36%.^[49]
• Open-source alternatives including Proxmox, KVM, and OpenNebula see increased adoption particularly among cost-conscious mid-market organizations.^[50]

Gartner estimates 18-48 month timelines for organizations to move away from VMware depending on complexity, warning migrations will be "long, costly and risky."^[51]