Japan’s antitrust watchdog has Broadcom in its crosshairs. The Japan Fair Trade Commission (JFTC) recently raided a local branch of the US tech giant. The authorities suspect Broadcom might be breaking competition laws by forcing customers to bundle VMware services with their purchases.
Japanese media sources report that the JFTC suspects Broadcom of unfair bundling practices and abusing its market position. The raid took place earlier today in Tokyo’s Minato district.
This development comes as a surprise, given Broadcom’s recent struggle to secure approval for its VMware acquisition from regulators in the UK, US, and China. Now, Japanese authorities are scrutinizing Broadcom’s post-acquisition behavior, raising questions about whether other countries or the EU might follow suit.
The JFTC operates similarly to its counterparts in the UK (CMA) and US (FTC). This isn’t surprising, as the JFTC was modeled after the US FTC when it was established in 1947 during the post-World War II US occupation of Japan.
Given these similarities, it’s plausible that the US FTC might also be eyeing Broadcom’s actions. It wouldn’t be unprecedented in the tech world – previous EU antitrust cases against companies like Google and Amazon have often been mirrored in the US. Regulators in Australia and India have also followed Europe’s lead on several occasions. Whether Japan can set a similar trend in this case remains to be seen.
A Broadcom spokesperson told Techzine the following: “Broadcom will work constructively and fully with the JFTC to resolve any issues and concerns; we do not have further comments at this early stage.”
Context
Since Broadcom acquired VMware in November 2023, a series of significant changes has unfolded. The new owner made three major moves: First, Broadcom separated autonomous components like the Carbon Black security service and VMware EUC (now Omnissa) from VMware. Next, it permanently ended perpetual licensing, following industry trends, leaving only subscription-based access to VMware products. The third change, which seems to be the main issue attracting Japanese scrutiny, is the bundling of various VMware solutions that were previously sold separately.
Now, only two main offerings remain: VMware Cloud Foundation and VMware vSphere Foundation. This new structure benefits customers who already use the full VMware suite, as they now pay less. However, for the vast majority of VMware’s customer base, who primarily needed just the virtualization services, it’s a different story. VMware dominates this particular market segment. Because customers can no longer purchase these services separately, many are facing price increases of up to 20 times their previous costs. Copy
Tip: VMware customers want to migrate away – not all of them can
Competitors such as Nutanix and Scale Computing are seizing the opportunity to attract disgruntled VMware customers. However, the ease of switching varies greatly from one customer to another. The high costs and complexity of migrating away from VMware might force many users to stick with it for now, even if they’re unhappy with the new pricing structure due to the bundled services. This situation could leave many customers temporarily locked into potentially overpriced VMware solutions.