The European Commission (EC) has formally approved Broadcom’s $61 billion bid for VMware, saying that Broadcom fulfils certain ongoing commitments around access and interoperability.
The deal which sits among the biggest tech acquisitions of all time was always likely to attract regulatory scrutiny since it was announced May last year. Europe revealed plans for an in-depth probe in December citing competition concerns, while the U.K. followed suit in March.
The Federal Trade Commission (FTC) in the U.S., meanwhile, is also currently investigating the deal.
Broadcom’s interest in VMware stems from a push to diversify beyond hardware through extending deeper into enterprise infrastructure software. The EC’s core concern was that through buying VMware, which provides virtualization software that works with hardware such as fibre channel host-bus adapters, storage adapters and network interface cards (which Broadcom provides), could restrict competition in the hardware markets Broadcom currently operates in.
Put simply, the EC was worried that Broadcom could restrict or “degrade” interoperability between VMware’s software and Broadcom’s hardware rivals such as Marvell, which develops similar fibre channel host-bus adapters to Broadcom.
Thus, the EC has made this one of the conditions for approving the deal — Broadcom must provide guaranteed access and interoperability relating to the “APIs, materials, tools, and technical support” that allow rival hardware companies (i.e. Marvell) to leverage VMware’s virtualization software. And on the same terms as Broadcom does.
The commitment applies for the next ten years and exists under direct supervision of the European Commission, with an “independent trustee” appointed to monitor the commitment.