VMware licensing change since acquisition by Broadcom

On 22 November 2023, Broadcom Inc. completed the acquisition of VMware. Perpetual licenses for the software were ended and changed to a subscription-based model. Customers report that this new model results in higher overall pricing for their use of VMware. Several notable businesses who are customers of VMware have started legal action against Broadcom.

Background

In 2025, Broadcom initiated the second phase of its VMware consolidation. The CEO stated that "more than 90% of VMware’s largest 10,000 customers have shifted from perpetual licenses to the subscription-based".

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. In addition, being late with license renewal causes an additional 20% cost penalty.

End of perpetual licenses

Broadcom's response

Broadcom argues that they have listened to their customers. They close their response to saying they will complete the transition plan to a subscription model for VMware.

Lawsuits

Dutch Ministry of Infrastructure (Rijkswaterstaat v. Broadcom Inc.)

On Friday, June 27, 2025, the summary proceedings judge granted Rijkswaterstaats (RWS) request. Broadcom must continue to provide RWS with support for a period of 2 years under the existing conditions and price.

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."

The ruling includes statements about earlier investigations. For instance, on July 22nd 2024, the European Commission stated that they would initiate investigations. They received complaints of the licensing model after Broadcom acquired VMware.

European Cloud Providers

On Wednesday 30, July 30, 2025, the trade body for European Cloud providers CISPE started legal action against the European Commission. The legal action focuses on the acquisition approval by the EU Commission; arguing the remedies taken were "irrelevant to the real threat".

AT&T

On November 21 2024, AT&T reached a settlement-in-principle with Broadcom over the alleged annual increase of 1,050% in costs for VMware. The terms of the settlement were not disclosed, but it is clear that AT&T is moving away from doing business with Broadcom. In the case, Broadcom argued to the court that they did not have to give support as AT&T did not renew their license.

US law recognizes the concept of transition assistance where the incumbent contractor remains legally responsible for maintaining service continuity and ensuring a smooth handover of responsibilities for government contracts: this is governed by Federal Acquisition Regulation (FAR), part 37. For business to business contracts, this is usually found in the contract transition clauses.

Consumer response

This section will highlight the cost hikes as those are often also reported by the contracted parties.

• CISPE's ECCO found that their members costs for VMware increased 8 to 15 times compared to the previous pricing model.
• The reliance on VMware is high across many different sectors and is not something that can easily be replaced by other software.