Tesco sues Broadcom over apparent breach of contract regarding VMware licenses

Tesco has sued Broadcom for breaching VMware licensing contracts, with knock-on effects possibly set to disrupt its ability to supply groceries across the UK and Ireland.

The lawsuit comes after the retail giant bought perpetual licenses for VMware’s vSphere Foundation and Cloud Foundation in January 2021, which was meant to include support and upgrades until 2026, with the option to extend for four more years.

However, after acquiring VMware, Broadcom stopped supporting perpetual licenses, pushing its more lucrative subscription-based models instead.

Tesco noted the new pricing strategy causes it to pay “excessive and inflated prices for virtualisation software for which Tesco has already paid” (via court documents seen by The Register).

The company might not be lying when it says it could experience disruptions – VMware’s software underpins around 40,000 server workloads, including tills and other operations across stores.

Tesco also named Computacenter as a co-defendant – the third party it used as a reseller for VMware products. The company seeks £100 million in damages from Broadcom, VMware and Computacenter, with the figure set to rise if the case is prolonged.

Replacing VMware could also be costly and risky for Tesco, potentially presenting further disruptions, hence the legal action to resolve the issue instead.

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But Tesco isn’t the only company taking issue with Broadcom’s pricing strategies – AT&T, Siemens and other have also filed similar lawsuits over perpetual license support.

Broadcom has previously argued that subscriptions are the industry standard, adding that its VMware Cloud Foundation suite delivers more value in the longer term.

Despite pricing strategies that ended up costing many customers more, Broadcom CEO did publicly acknowledge “some unease.”

EMEA CTO Joe Baguley also noted 87% of VMware’s top 10,000 customers had signed up for VMware Cloud Foundation, suggesting that pricing concerns haven’t translated to a widespread loss of customers.

TechRadar Pro asked Tesco and Broadcom for a comment, but we did not get an immediate response.

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