Broadcom promises continued interoperability with VMware for rival Marvell
Broadcom’s proposed $61 acquisition of VMware has the go-ahead from EU regulators—with some caveats, mostly focused on continued interoperability of VMware software with rival vendors such as Marvell.
According to the European Commission, Broadcom’s acquisition of VMware could have allowed the company to restrict competition in the market for network interface cards (NICs), storage adapters and Fiber Channel Host-Bus Adapters (FC HBAs)—which Broadcom makes and which VMware’s software interoperates with. The EC’s analysis zeroed in on the potential for harm to competition in FC HBAs in particular, saying that Broadcom could potentially restrict or degrade interoperability between VMware’s server virtualization software and Marvell’s hardware.
Broadcom offered up “comprehensive access and interoperability commitments” to both Marvell and potential future market entrants, including guaranteed access to interoperability APIs, materials and support necessary for the development and certification of third-party FC HBAs, the EC said, as well as guaranteed access to the source code for current and future FC HBA drivers that will ensure interoperability with VMware’s server virtualization software. Broadcom also committed to “organization separation” between the team working on its FC HBAs and the team in charge of third-party certification and technical support. Those commitments will be in place for 10 years.
“Broadcom holds a very strong position in the market for the supply of certain hardware components. VMware is a key server virtualization software provider. By acquiring VMware, Broadcom could restrict or degrade interoperability between VMware’s leading server virtualization software and some competing hardware components,” said Margrethe Vestager, executive VP in charge of competition policy for the EC. “But the commitments offered by Broadcom will enable its only rival Marvell, to continue competing on equal footing and ensure a similar protection for any future entrants.”
Broadcom announced plans to acquire VMware in May 2022, in a cash and stock transaction valued at $61 billion. Broadcom’s president and CEO Hock Tan offered his thoughts on the transaction in a blog post entitled “What a combined Broadcom and VMware can deliver to our customers.”
Broadcom is best known for its semiconductors, but the company already has an enterprise software group, mostly accreted through past acquisitions, that brought in more than $7 billion in revenue in 2021. VMware’s annual revenue — $11.8 billion for 2021 — dwarfs that, however. Broadcom plans to rename its software group VMware with the conclusion of the acquisition, which it expects to complete by the end of next year.
“Three topics are top of mind for customers as it relates to the VMware-Broadcom transaction: multi-cloud, cloud-native apps and pricing,” said Tan in the blog post.
In a company statement issued Wednesday, Broadcom said that the EC approval of the merger “recognizes the importance of this combination in enabling enterprises to accelerate growth and momentum in the multi-cloud ecosystem, and in expanding customer choice and creating more potential for increased innovation and competition.”
The company added: “While Broadcom believes that its proposed acquisition of VMware will only increase competition and innovation in cloud computing, Broadcom provided the European Commission with a technology access remedy that preserves interoperability, a core principle that would not have changed as a result of this transaction.” Broadcom did this to fully address the concerns expressed by the European Commission, and Broadcom welcomes the Commission’s decision to accept this access remedy.”
Broadcom says it continues to expect that the transaction will close in its fiscal year 2023.
