British supermarket chain Tesco has taken Broadcom and reseller Computacenter to court over a heated dispute concerning VMware licenses and support contracts. According to the complaint, which was seen by The Register, the continuity of the IT infrastructure is at stake.
In 2021, Tesco purchased perpetual licenses for VMware vSphere Foundation and Cloud Foundation, supplemented with Tanzu subscriptions and multi-year support and upgrade contracts that would run until 2026. An option to extend the support by four years was also agreed upon. However, since Broadcom’s acquisition of VMware in 2023, the policy has changed: support for perpetual licenses has been discontinued and customers are being forced to switch to new, more expensive subscription models.
According to Tesco, this amounts to paying twice for software for which the company already holds licenses. In addition, according to the complaint, Broadcom refuses to make upgrades, such as to Cloud Foundation 9, available under the existing contracts. The distribution of security patches and bug fixes is also limited to subscription customers, which the supermarket chain considers a breach of contract.
Tesco claims that its entire digital operation depends on VMware technology. This involves around 40,000 virtual workloads that support cash register systems and logistics processes, among other things. Without timely updates and support, stores and distribution centers could be immediately affected. The retailer is therefore demanding at least £100 million in damages, which will increase as the situation continues.
Rijkswaterstaat had the same problem
This conflict is not an isolated case. AT&T and Siemens Broadcom, among others, have previously sued over similar issues. In addition, in June, the District Court of The Hague ruled that VMware and Broadcom must continue to provide support to Rijkswaterstaat until the government agency has migrated to an alternative. The judge ruled that Rijkswaterstaat, after years of investing millions in VMware products, should not be left without support due to a sudden change in the licensing model.
Rijkswaterstaat uses VMware to manage critical infrastructure such as tunnels, locks, and bridges. After the acquisition by Broadcom, the subscription model was also introduced here, which, according to research, would almost double the annual costs: from €2.1 million to €4 million.
Although switching to alternative platforms, such as Nutanix or OpenStack, is increasingly being considered by dissatisfied VMware customers, this seems to be a costly and risky scenario for an organization such as Tesco. Legal action is therefore being used as a means of pressure to influence negotiations with Broadcom.