November 22, 2022
With the UK and the European Commission now investigating Broadcom’s pending, $61 billion acquisition of VMware, Broadcom CEO Hock Tan just published, perhaps not coincidentally, a blog discussing the importance of cloud sovereignty.
Reuters says Britain’s competition regulator began its inquiries on Nov. 21; the European Union’s regulatory arm kicked off its efforts last week.
The topic of cloud sovereignty is not new but has gained significant traction in the past year or so, especially in Europe. That’s because the continent stands out as among the most stringent when it comes to enforcing data privacy and security — two areas where pure public cloud computing can trip up because information can float around in the ether rather than being corralled on-premises or in a strictly overseen regional data center. And, no surprise, the European cloud computing sector is dominated by none other than American providers, namely Amazon Web Services, Microsoft Azure and Google Cloud.
Regulators and Data
That dominance has given Europe’s regulators pause. They want to ensure that their citizens’ and companies’ data remain in the European Union. As laws have tightened, public cloud providers, including those from the United States, have had to prove that they keep data from flowing outside of specific borders and that they prevent unauthorized access to that information. The Big 3 tend to do this less by talking about cloud sovereignty and more by opening new cloud regions in very strategic locations. For example, AWS just launched a new data center in Spain.
Even so, Tan noted that customers in Europe have been especially vocal about inquiring into Broadcom’s cloud sovereignty strategies once VMware comes on board. (After all, Broadcom has yet to cement itself as a cloud computing player. For now, it remains a behemoth chipmaker.) They want to know “what role a combined Broadcom-VMware would play as governments increasingly recognize the power of data – economically, politically, and geo-politically – to drive local, national and even multi-national economic development,” Tan wrote on Nov. 21.
How Broadcom Views Cloud Sovereignty
Broadcom’s Hock Tan
“Broadcom sees cloud sovereignty as extremely important to the future of data management, and we see VMware, with its multicloud strategy and offerings, as being a key enabler in the adoption of sovereign clouds,” said Tan.
With that in mind, demand for sovereign clouds is growing. And Broadcom, with VMware in its portfolio, wants to capitalize on that. Citing a recent Capgemini Research Institute survey that showed more than 70% of large organizations plan to adopt cloud sovereignty, both to protect customer data and ensure regulatory compliance, Tan surely sees an uptick in adoption for VMware’s sovereign cloud capabilities. (Notably, though, one of its rivals, Oracle Cloud, seems to have gotten the jump on the channel side here, with the recent debut of partner “game-changer” Oracle Alloy.)
That will serve as a boon for shareholders and end users, even as Tan indicated that simply having sovereign cloud expertise will not be enough. Indeed, he wrote, cloud sovereignty represents only “one piece of a data management puzzle that is highly complex and continues to evolve.”
Broadcom, he added, “must anticipate this evolution for our customers and then innovate to meet the challenges we see ahead. We feel strongly that our acquisition of VMware will accelerate this innovation, particularly in multicloud, where VMware already has leading solutions.”
Combining multicloud with sovereign cloud “enables customers to deliver differentiated services at scale while remaining secure and in compliance with regulatory frameworks,” Tan said.
Certainly the timing of Tan’s blog is interesting. It seems to be a vehicle to assure European regulators, investors, customers and partners, in specific, that all is well when it comes to Broadcom, VMware and cloud sovereignty. To be sure, reports have circulated that Broadcom wants to speed up the European Commission’s approval process so it can close the VMware deal faster. In a roundabout way, Tan addressed that.
“Following the close of Broadcom’s acquisition of VMware, we will have a complementary portfolio that provides our customers – such as governments and critical infrastructure operators, including banks and healthcare operators – the tools they need to use the various cloud environments strategically and impactfully,” he wrote.
Broadcom first announced the acquisition of cloud and virtualization giant VMware in May. If regulators give it the green light, it will represent one of the biggest tech mergers in history.
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