Broadcom's $61b VMWare merger faces another hurdle: UK's competition watchdog

A month after the EU decided to stick a probe into semiconductor manufacturer Broadcom's proposed buy of virtualization juggernaut VMware, the UK has said it will do the same.

Broadcom first announced the agreement with the cloud computing company in May 2022 as a way to diversify its technology portfolio.

The Competition and Markets Authority (CMA) offered no detail on its stage 1 probe although the regulator previously said, in November 2022, that the merger could "result in a substantial lessening of competition."

European regulators have been more explicit about their focus. As The Reg said in October last year, Broadcom believed it could convince Euro regulators that its buy would actually create more competition in the cloud market, which is dominated by Microsoft, Amazon, and Google.

Then, rather surprisingly, the union of member states decided it would investigate the Broadcom/VMware deal over its impact to hardware, rather than, say, competition in the cloud space or the potential of price hikes to software, with VMware's wares by far the dominant platform in server virtualization.

The idea the EU has is that Broadcom might bundle mainframe and security products with the popular virty software, or use VMware's involvement in Project Monterrey to "hinder the development of SmartNICs" by rival providers – although as The Reg's virtualization desk has pointed out, this is probably missing a trick, as it would make sense for the EU to look for commitments around software pricing.

• Broadcom tries to quash VMware price rise rumors as CEO promises they won't
• EU probes Broadcom/VMware deal over impact on hardware, not price hikes or cloudy concerns
• VMware adds subscription version of basic vSphere for server consolidation
• VMware loses three top execs who owned growth products

Broadcom has repeatedly claimed it has no plans to increase costs, with CEO Hock Tan saying: "The Broadcom business case for this transaction is premised on focusing on the business model, increasing R&D, and executing so that customers see the value of the full portfolio of innovative product offerings — not on increasing prices."

If the merger goes ahead, Broadcom's Software Group will rebrand and operate as VMware, incorporating Broadcom's existing infrastructure and security software solutions as part of an expanded VMware portfolio, according to statements from the two companies.

The deadline for the CMA's phase 1 decision is set [PDF] for March 22, when it will either set the phaser to 2 or drop the probe altogether. ®