CISPE filed a formal statement to the General Court of the European Union arguing that the European Commission's approval of Broadcom's acquisition of VMware enabled Broadcom to monetize VMware's pre-existing dominance in server virtualization software. CISPE said the Commission ignored warnings about risks of price increases and contractual lock-in. Broadcom's CEO publicly targeted lifting VMware's standalone EBITDA from $4.7–$5.0 billion to $8.5 billion within three years, which CISPE characterizes as achievable only through price hikes and forced bundling. Broadcom raised $28.4 billion in new debt and assumed about $8 billion of VMware debt, creating incentives to extract cash rapidly from customers. Since the acquisition, prices have in some cases risen by as much as 1,500%.
"In a statement, CISPE pointed out that Broadcom's CEO publicly committed to lifting VMware's standalone earnings before interest, taxes, depreciation, and amortization (EBITDA) from between $4.7 and $5.0 billion to $8.5 billion within three years of closing. This increase of 60 to 80% in a market growing at only 5% to 8% annually couldn't realistically come from organic growth or efficiencies, the trade body noted, but only from the aggressive monetization of VMware's locked-in customer base through steep price rises and forced bundling."
"CISPE is also unhappy about the way the deal is being financed, with Broadcom having raised $28.4 billion in new debt and assuming around $8 billion of VMware's existing debt to fund the acquisition. This, CISPE added, created a powerful financial incentive to extract cash rapidly from VMware's installed base, reinforcing the provider's market power and incentivizing aggressive pricing strategies. CISPE claims EC ignored warnings"
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