European cloud watchdog slams Broadcom over VMware licensing practices, issues warnings about SAP

Broadcom isn’t playing nicely in the European market, according to a new report by the independent monitoring body European Cloud Competition Observatory (ECCO), which rates Broadcom’s status as “critical” in its most recent analysis of cloud competition in Europe.

The company’s conduct has “deteriorated markedly” since October 2025 due to what ECCO calls “continued and escalating” unfair licensing practices, delay tactics and “procedural obstruction” in the European Commission’s antitrust investigation, and “wholly misleading” sovereignty claims in the European market.

“These developments represent a serious and continuing attempt by Broadcom to restructure the market in its favor,” the group claimed. “This is a threat not only to the viability of European cloud infrastructure providers, but to the integrity of EU competition enforcement.”

SAP, meanwhile, is at “amber status,” meaning there are escalating concerns in the European market due to newly-introduced API restrictions and changes to agentic AI licensing that could stifle competition.

Microsoft, for its part, remains in good standing, and has made progress relative to previously-raised concerns.

Grievances against Broadcom

ECCO is made up of members of the Cloud Infrastructure Services Providers of Europe (CISPE), as well as European customer organizations. The group rates providers in its regular reports with by color: Red means no meaningful progress has been made, amber represents stalled progress or barriers to resolution, and green signals significant and sufficient progress made regarding specific issues.

In this latest report, Broadcom sits firmly in the red category. ECCO cited several concerns.

For starters, the group is raising flags around “market-harming actions” taken by Broadcom, notably the abrupt shutdown of its partner program, and new “severe” restrictions to its Bring Your Own License (BYOL) terms.

In January, Broadcom unilaterally terminated its main reseller program for VMware cloud service provider (CSP) partners. The program had allowed European cloud companies to provide virtualization services that are critical to large cloud deployments. Now, they can no longer offer VMware services “under any terms.”

“Essentially, vast swathes of Europe’s cloud ecosystem were, at a stroke, denied access to a crucial product for which there are no immediate alternatives,” ECCO wrote. The group argued that Broadcom is “systematically exploiting” its dominant position, and taking advantage of the fact that its VMware virtualization software is complex to replace.

Switching can be time-consuming and disruptive to business operations, ECCO said: “Re-engineering, even where it is possible, is a multi-year and multimillion Euro project.”

The group also pointed to a new bring your own license (BYOL) scheme: Customers are now forced to choose from a small group of European companies to host their BYOL workloads. There are few Broadcom Certified Cloud Services remaining, essentially creating lock-in and probably price inflation due “mini-monopolies” in some regions and sectors.

Other licensing concerns center around cost: CISPE members have been reporting license price increases of 10x or more compared to VMware pricing before its 2023 acquisition by Broadcom.

The company has also eliminated overage-based pricing, which allowed CSPs to provision capacity and reconcile usage if in arrears. Now European cloud companies are required to pre-commit to core counts, essentially eliminating the flexibility required when delivering cloud services.

This imposes “severe commercial and operational constraints,” ECCO contended.

Dovetailing with this, CISPE said it has confirmed rumors of a potential kill switch or “degradation mechanism” in VMware’s licensing infrastructure. Broadcom requires compliance reporting every 180 days; failure to do so triggers automated degradation or blocking, thus rendering a customer’s virtualization environment non-functional.

The existence of this mechanism represents an “extraordinary and disproportionate” exercise of market power and raises significant questions about the resilience and security of European digital infrastructure, ECCO said.

Finally, the group pointed to Broadcom’s active obstruction of the European Commission’s antitrust investigation into its VMware acquisition. The company continues to issue legal challenges and requests to suspend proceedings, thus stalling the process, and has invoked its US legal privilege in what seems an attempt to protect potentially damning documents.

ECCO is urging the European Commission to resist attempts to suspend the antitrust investigation and to enforce disclosure obligations even-handedly. “These are not legitimate procedural steps, they are a calculated strategy to delay and dilute effective enforcement,” it said.

SAP is throttling, changing billing

ECCO isn’t entirely thrilled with SAP, either; it calls out “specific, substantial, and … potentially anticompetitive” practices, including traditional antitrust measures that direct customers to its own cloud offerings and impose restrictions on data access for agentic AI.

The group argued that SAP has been throttling data access as a means to control the AI layer. Customers are being offered differentiated, lower grade products unless they migrate to SAP’s own cloud infrastructure.

This follows an ongoing trend by the company: In July 2023, SAP announced that all future innovations would be delivered cloud-first. But facing backlash, the company backtracked, saying in early 2026 that its AI, Joule, and other cloud-first tools would be available to on-prem customers.

There was a caveat, though: New products and features would only be made available to customers committing to transition to RISE with SAP, the company’s subscription-based ERP migration platform.

SAP also announced software billing changes at its Sapphire 2026 conference. Historically, the company has charged consumption-based pricing (that is, the more software is used, the higher the cost), but it plans to shift to imposing capacity-based (per-server) pricing on its partners, with caps for certain scenarios.

This will immediately make it more expensive to offer SAP services on non-SAP clouds, will favor large companies that can spread costs across a wide customer base, and will potentially price out smaller players offering SAP alongside other cloud service offerings, ECCO argued.

These developments “raise serious concerns about foreclosure of third-party competition in the emerging enterprise AI market,” ECCO said.

On a positive note, ECCO credited Microsoft’s decision to “harmonize” the cost of extended security updates across customers, regardless of choice of cloud. This addressed a previous complaint by CISPE and demonstrates the company’s “continued willingness” to recognize and respond to concerns raised by relevant stakeholders. Redmond has also engaged in new collaborations under the European Cloud Accelerator, including the co-development of cloud-based onboarding for SMEs.