November 16, 2022
European Union regulators will decide by Dec. 20 whether to give the thumbs-up to Broadcom’s VMware acquisition.
If they have serious concerns, they can open a four-month investigation, according to Reuters.
Broadcom, of course, hopes to avoid that delay. Reports already surfaced last month that the Silicon Valley chipmaker wants to fast-track antitrust proceedings in Europe. Broadcom claims that because its likely rivals – Amazon Web Services, Microsoft Azure and Google Cloud – hold so much market share, blessing the pending, $61 billion VMware purchase will not create a competitive imbalance.
On Nov. 15, Reuters cited a Broadcom statement about the matter.
“We are confident that this deal does not present any competition issues and look forward to working with the European Commission throughout this process,” the company said.
In October, an anonymous source told Reuters that EU regulators would have to see “a real competition problem — horizontal, vertical, foreclosure risk,” to invoke the four-month investigation.
“I think we can show those risks don’t really exist in this case,” the source said.
Broadcom’s VMware acquisition represents the second-largest deal worldwide so far this year. Microsoft’s $75 billion purchase of Activision Blizzard ranks as the biggest.
With VMware, Broadcom aims to go deeper into enterprise software. Per its third-quarter earnings release, 22% of its net revenue comes from infrastructure software. Broadcom’s VMware acquisition will push that figure to 49%, Broadcom has said.
VMware, meanwhile, will retain its brand. The Broadcom Software Group will join VMware and take on that identity.
What Will VMware’s Broadcom Acquisition Mean for the Channel?
In terms of the channel, the pending Broadcom-VMware combination continues to raise eyebrows among partners. There are a lot of unanswered questions about how a semiconductor manufacturer will absorb VMware, which continues its evolution from a transactional hardware to a cloud-focused, subscription software business model. Both companies, however, run channel programs, and VMware’s senior vice president of strategic ecosystem and industry solutions, for one, has anticipated the best.
VMware’s Zia Yusuf
Partners can look to Broadcom’s treatment of previous channel-friendly companies it has snapped up for potential prognostication about the future. Over the last five years, Broadcom has bought several software companies, including Symantec and CA Technologies. Even so, some indirect channel experts remain somewhat wary. Debra Korol, senior business development manager for VMware partner ClearBridge Technology Group, told Channel Futures at 2022’s VMware Explore, “It’s a weird environment right now. There are a lot of changes, but nobody knows what the changes are going to be, even though some things are communicated and some things are not.”
Broadcom’s VMware acquisition is expected to close in Broadcom’s 2023 fiscal year, which started this month.
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