VMware must support crucial Dutch govt agency as it migrates off the platform, judge rules Broadcom's VMware subsidiary must provide a Dutch government organization with continued software support for at least two years while it manages a migration to an alternative platform, according to a court ruling, or else face fines up to €25 million ($29 million). The Rijkswaterstaat (RWS), the exec arm of the Ministry of …
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They try to justify it by saying that a whole bunch of extra software licenses are included, for extra VMware features. You may not want those licenses, you may not want to use those features. But they won't sell what you want any more, they will only sell the big bundle or nothing.
This is clearly unethical. But whether it is illegal, depends on what country you are in and whether your previous license promised you could renew it.
All people choosing closed source commercial software are taking the risk that their supplier might do this, or might just discontinue the product or go bankrupt and stop supporting it.
All people choosing closed source commercial software are taking the risk that their supplier might do this, or might just discontinue the product or go bankrupt and stop supporting it.
At least if you're purchased the closed-source software, you can keep using it under the original (perpetual) license without support and updates until you sort something out.
But with "cloud" services, or a software "subscription," the moment you decide not to renew at the exorbitant increased price, your business-critical services stops working, and you probably lose all your data too.
"At least if you're purchased the closed-source software, you can keep using it under the original (perpetual) license without support and updates until you sort something out."
So long your software with perpetual license doesn't require regular contact with the license server to check if it is "still" a legit license and refuses to function when that server can't be reached or is "retired early".
European contract law is different to English contract law (which is broadly also what the US use). Obviously every country has it's own legal quirks and differences. But in the European system a judge will try to deliver a settlement that's more "in the spirit" of the original contract. Whereas in English contract law the judge will attempt to deliver the contract as closely as possible to how its written - discarding individual clauses of the contract if they're not achievable and still implementing the rest if at all possible.
The English systems tries to give more predictable legal outcomes. The European one attempts to achieve fairer ones. Which you prefer is a matter of judgement.
The wider issue is that of company A buying company B and failing to make good on company B's debts and obligations.
Those debts and obligations include warranties and support contracts. If a perpetual license was granted by company B, then (in fairness, not necessarily in law) it should be irrevocable by company A.
While I won't argue that Broadcom isn't 50 shades of awful for this move, no vendor is under any legal obligation to continue renewing contracts in perpetuity unless that is explicitly stated in their earlier contracts (which no sane vendor would ever do unless offered a truly massive pile of money). The potential costs are ruinous.
The reason that companies don't normally acquire other companies and then Broadcom them is reputation hits. Yes, people used to actually care about reputation (a few of us weirdos carry on the tradition), but now everyone wants the government to renegotiate their deals if they go sour.
It's not like Broadcom doesn't have a reputation here. They've done this before. And they'll do it again, because people keep letting them. As soon as there was even a whiff of an acquisition, anyone with any sense of sanity and / or fiduciary duty started planning a migration immediately.
The IT administrations / CIOs / politicians / whatever in charge of these organizations that didn't migrate breached their fiduciary duties. If they locked in so hard on a single vendor that they couldn't migrate in a year, then they breached their professional duties.
Not responding to the real and imminent threat of your vendor being Broadcommed is an inexcusable and unforgivable management failure.
Not being able to respond to the real and imminent threat of your vendor being Broadcommed is an inexcusable and unforgivable management failure.
VMware's customers promptly fleeing would impose costs on Broadcom an order of magnitude more than all of the potential government actions combined, but too many people are too fucking stupid / lazy / incompetent to act in their own best interests. They could have made Broadcom choke hard on that acquisition price instead of profiting from it, but nah.
I have a theory that companies are like people and we all secretly kind of need the odd annoying one... everyone knows that one shitty person that people seem to tolerate.
Seems to happen with companies too. Broadcom has looked at Oracle, and rather than thinking 'what a bunch of ...' they've thought 'What an amazing bunch of ....'
It's not the perpetual nature of the licence that's at issue - it's the support that's necessary for the licence to have any meaningful continued application.
It's equivalent to the "right to repair" of equipment and machinery: if you don't have the ability to fix it yourself or via a third party, then you don't "own" it in any meaningful sense.
Aahhh ... excellent point; thank you.
Also note there are multiple kinds of "support". When HP acquired Compaq, they revoked access to Compaq's "SoftPaqs" -- BIOS updates, disk drivers, etc., by anyone who did/does not have a currently-paid-up service contract with HP.
HP could have allowed continued general-public, free access to those files, at no cost to themselves (the code was already written, the SoftPaqs [compressed files+self-executing expander] were already created, and the FTP server which hosted them saw little traffic for these older SoftPaqs).
Instead, they went the price-gouging route, which dropped the non-business resale value of used Compaq/HP servers, desktops, and laptops to near-zero.
I was thinking about picking up a few DL380s from a local surplus store, but not after that move.
I will never again buy or recommend Compaq/HP equipment.
Years ago now, I purchased a HP microserver to use as a home NAS/media server, nice hardware, basically silent other than HD ticks, low power, 4x3.5 (1x5.25) bays etc.
Hadn't realised at time of getting it, that access to things like driver and BIOS updates were time limited after purchase (fool me once!). You had to sign up, and so pay, for ongoing support if you wanted access to any updates after the initial access ran out. As this was just for home use, I did not take them up on this 'offer'.
So HP went on to my permanent ban list. Not that they'd notice!
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Broadcom sharholders in the US are so greedy, that is why more and more companies are behaving like that, the solution is spend $$$ and build non-US based stuff and starve US based sharholder of their extreme greed.
Broadcom is the US problem, unfortunately such toxic behavior now also went to other countries, these kinds of behaviors must be punished!
Martin didn’t go to jail for buying out pharmaceutical companies and ripping out all R&D and raising prices of life saving drugs by up to 1000 percent.
That was all legal apparently.
He went to jail for securities fraud
That is what they got him on, just like they got Al Capone on tax evasion, but that's not the reason they came after him.
His ticked was punched the moment he started to piss off too many voters at once because it got political. It was needed to get rid of him before he started a trend that would impact all the ripoffs going. He was making it far too obvious, and nobody could use regulation that imposed some control so he had to go, stat. Ergo a bit of digging (none of these goons have clean books, they're too greedy) and presto, problem solved.
Of course, there was another option there. I don't think the drugs he gouged the prices on were the only options. It's just they were the only options that were currently licensed for use in the US. Alternatives were in use in Europe, so it could have been an option to look at licensing in order to allow more competition.
I'm not sure what the competition authorities could have done: it's not as if Broadcom bought a competitor, it just identified an inelastic segment ripe for exploitation and went ahead with it. VMWare could have done exactly the same without being part of Broadcom. The buyout was debt-financed, but the SEC is happy because investors will get a nice payout due to the increase in prices.
Charlie Clark,
One of the definitions of being a monopoly (in economics not competition law) is the ability to set monopoly prices. As a supplier who isn't a monopoly you have limited ability to affect the market price, because of your competition.
However, competition law does allow companies to be deemed monopolies even with as little as 20-30% of the market - which you partly test for by looking at if they have control of market pricing - amongst many other tests. I don't know how much the law allows a competition authority to look at a company's past behaviour - in order to assess whether it should be allowed to do something in future. Obviously this depends on jurisdiction and also some competition authorities are more politically controlled than others - in the EU, China and US they're part of government and so much more political. The CMA in the UK is an arms-length insitution that the government of the day has much less influence on.
This is why the Google and Apple app stores are finally getting beaten up by the courts and competition authorities. Because they're both smartphone OS monopolists (due to having market control) and set their app store fee at 30%. There are no discounts for big companies, or for volume, which suggests it's not a true market price. They've leveraged their smartphone OS dominance into controlling even more of the app store market - and have even more control of that. Hence they can set a price and maintain it.
Thus if VMware were a big enough part of the market, even without Broadcom bringing stuff from the same market into play a competition regulator could have done an investigation and maybe imposed some kind of conditions on the takeover to stop them from abusing an existing monopoly. Or retrospectively punish them for the pricing now. Having a monopoly is not illegal. Google earned its search and advertising monopoly fairly by being the best, for quite a long time. What Google have done that is illegal, but they're only starting to be investigated or punished for some of now was to use their search monopoly to create a browser monopoly and to subsidise the creation of their phone OS monopoly with their advertising monopoly - which they did in order to get even more data and build a moat to protect that ads/search monopoly by not allowing a rival in the mobile space.
These articles about Broadcom and what they're doing with Vmware seem very negative. Conversely we read about how well they are doing financially.
In my opinion the sustained damage they are doing to their brand will have permanent financial implications and may lead to the demise of Vmware. There are great alternatives, and even open source ones like Proxmox.
I just don't see them winning long term. If I was an investor I would start planning my exit for the next two years when most contracts start expiring. One should not take a great product and wield the capitalist axe at it.
Does anyone know where the Dutch agency is moving to?
Broadcom's business model is built on doing exactly this - buying something and squeezing every last penny they can get out of it. Once all the customers leave, they abandon the hollowed out husk and move on. The investors don't care whether the product stays or goes, and neither does Broadcom, they only care about the money they can make out of it.
The "Veluwemeer" lake was part of the "Zuiderzee" and as such, is a dammed in part of the sea. It was always water, not artificially created. It just changed name from sea to lake.
As for the "aquaduct", it's a tunnel that replaces what was originally a bridge in the road. It doesn't raise the water level one bit, so calling it a bridge is.... a bridge too far (I will get my coat).
I wonder how this ruling would have turned out if the damaged party had been a private entity rather than a government agency.
It seems the outcome would not have been necessarily based on any judicial bias towards the interests of government bodies, but rather on Broadcom’s capacity to deploy vast legal and financial resources. A poorer company might have simply backed down - opting to pay for a new license rather than endure prohibitively expensive legal proceedings.
vordan,
European contract law tends to give judges more leeway to try and interpret contract disputes to try and keep them to the "spirit" of the original contract. English (hence US) contract law tends to emphasise the judge sticking as closely to the written letter of the contract, rather than trying to interpret the intent of the parties to the contract.
This means that under English contract law you're getting a bit less fairness in exchange for more certainty of outcome - whereas in European contract law if one parties breaks the spirit of the contract they're more likely to lose their case, but both sides have less certainty how things will come out if they go to law. It's almost a philosophical difference of how to handle contract disputes.
Should be more of it. :)
The Dutch have a reputation for thrift so I shouldn't imagine they would be overly keen to part with their hard earned guilders (ok, €) for basically no better reason than to bolster the already obscene profits of a rapacious US based multinational.
I am curious as to what platform RWK are migrating to. Nutanix? Or some abysmal American cloud service.
Between this, the ATT lawsuit, and a few other pending 'back bone provider' ramp ups, I honestly don't know how Broadcom will survive. We are talking core infra that is leveraged to not only make companies operate, but fuel their profits. If the Dutch court rules that broadcom must support that government while they off board, that ruling could be leveraged throughout EU, if the SCOTUS decided to follow suit, that would help the ATT lawsuit. In the end, the VMware trust is trashed and never going to recover at this point. The F100 that Braodcom has by the nuts are going to eject services by the end of their current terms too, hell I know of a few F100's that are already shopped and arein early deployment with Nutanix, doing a full replacement of a multi 100million VMware deployment. Once VMware is gutted completed and Broadcom has deflated, if VMware ever comes back to sanity I personally will never bite on it again and I am a VCDX.
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