The European Commission has opened an inquiry to assess the proposed acquisition of enterprise cloud software firm VMware by Broadcom. The European Commission said this investigation is mainly concerned about the “deal transaction would allow Broadcom to restrict competition in the market for certain hardware components which interoperate with VMware’s software”.
VMware was acquired by chip and software maker Broadcom from Dell Technologies for $61 billion in May this year.
This, in turn, could lead to higher prices, lower quality, and less innovation for business customers and consumers.
“Broadcom may start bundling VMware’s virtualisation software with its own software (namely mainframe and security software) and no longer offer VMware’s virtualisation software as a stand-alone product reducing choice and potentially foreclosing rival software providers,” said the commission.
The Commission now has 90 working days, until May 11 2023, to make a decision.
In September, the US Securities and Exchange Commission (SEC) charged VMware for misleading investors by obscuring the company’s financial performance.
VMware allegedly misled investors about its order backlog management practices, which enabled the company to push revenue into future quarters by delaying customer product deliveries.
“As the SEC’s order finds, by making misleading statements about order management practices, VMware deprived investors of important information about its financial performance,” said Mark Cave, Associate Director in the Division of Enforcement.
VMware posted $3.21 billion in revenue for the third quarter this year — an increase of 1 percent from the third quarter of fiscal 2022.
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