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Broadcom’s $61 billion bid for VMware has been approved by the European Commission (EC) if Broadcom meets access and interoperability commitments.
When announced in May 2018, the megabucks deal, one of the largest tech acquisitions ever, was bound to draw regulatory scrutiny. In December, Europe announced an in-depth probe for competition reasons, and the U.K. followed in March.
The U.S. FTC is also investigating the deal.
Diversification
Broadcom is interested in VMware to diversify beyond hardware into enterprise infrastructure software. The EC was concerned that buying VMware, which provides virtualization software for Broadcom’s hardware like fibre channel host-bus adapters, storage adapters, and network interface cards, would limit competition in Broadcom’s hardware markets.
The EC worried that Broadcom could “degrade” interoperability between VMware’s software and Broadcom’s hardware rivals like Marvell, which makes similar fibre channel host-bus adapters.
Thus, for the EC to approve the deal, Broadcom must guarantee access and interoperability to the “APIs, materials, tools, and technical support” that allow rival hardware companies like Marvell to use VMware’s virtualization software. Broadcom-like terms.
An “independent trustee” monitors the ten-year commitment, which is directly supervised by the European Commission.
As we’ve seen with other regulatory probes, Europe’s approval may be a sign of things to come. Perhaps most notable is Microsoft’s billion-dollar Activision deal, which was blocked in the U.K., approved in Europe, and almost approved in the U.S. yesterday after a judge ruled that the FTC couldn’t block it.
Today’s news moves the Broadcom-VMware deal closer.
