Broadcom's VMware takeover
The $61 billion acquisition of VMware by Broadcom is currently under investigation by the European Commission and the Competition and Markets Authority in the UK. The deal has raised concerns about its potential impact on competition and innovation within the market for networking hardware components, prompting regulatory scrutiny.
The Commission is expressing concerns regarding the potential merger between Broadcom and VMware. The merger may grant Broadcom the ability to restrict or decelerate the accessibility of VMware's hypervisor stack to suppliers of NICs, fiber channel host bus adapters, and network storage adapters that operate with the software. This may create an anti-competitive environment where Broadcom's competitors struggle to compete in the market. As a result, it may lead to increased prices, inferior quality, and limited innovation for both business customers and consumers.
The networking hardware industry is dominated by a few major players, with Broadcom at the forefront. If Broadcom were to acquire VMware, they could potentially limit the use of its virtualization software on hardware from other manufacturers, giving them a competitive advantage over rivals. Also, this move could compel companies to opt for Broadcom's networking products over competing brands, resulting in an unfavorable market for competitors.
Broadcom's planned merger with VMware is currently under scrutiny by regulatory bodies in both the UK and US. The Competition and Markets Authority in the UK and the Federal Trade Commission in the US have expressed concerns similar to those raised by the European Commission. However, the merger has been approved in Australia, Brazil, Canada, and South Africa. VMware's CEO, Rangarajan Raghuram, remains optimistic that the merger will be finalized in the fall, despite ongoing investigations.
Nonetheless, the investigation is still ongoing, and both corporations have the opportunity to submit responses and request an oral hearing before the commission makes its final decision on June 21. The UK's CMA has until September 12 to make its decision.
