The pressure has been building for months, and on Thursday it became official. The European Commission has opened a three-year antitrust case against Broadcom, according to people familiar with the decision, responding to complaints from cloud providers about the company’s position in two markets: the licensing of VMware software and the design of custom AI chips. The case is the latest in a series of European actions against U.S. technology companies this week.
The cloud providers’ complaints are specific. Five cloud service companies have been pressing the Commission to intervene over Broadcom’s VMware licensing terms, which they say have become more expensive and more restrictive since Broadcom acquired VMware in 2023, and over Broadcom’s strength in the market for custom application-specific chips, the accelerators designed for individual AI companies. The providers argue that Broadcom uses its position in one market to pressure customers in the other.
The VMware acquisition has been a source of tension since it closed. Broadcom paid $69 billion for the virtualization software maker, then reshaped its business, moving it to subscription licensing, cutting products and raising prices for some customers. The changes pleased investors, who have watched Broadcom’s shares rise on the strength of its AI business, but they angered customers, including the cloud providers who built services on VMware’s technology.
The custom chip business has made Broadcom one of the most important companies in AI hardware. Broadcom designs the custom accelerators used by some of the largest AI companies, working with customers to build chips tailored to their models, and its design wins have made it a central player in the AI supply chain. The market has rewarded the company accordingly, with its stock among the best performers in the semiconductor sector.
The antitrust case targets the intersection of the two businesses. The cloud providers’ argument, according to people familiar with their complaints, is that Broadcom can use VMware’s software, which runs much of the world’s cloud infrastructure, to pressure the same customers who might buy AI chips from Broadcom’s competitors. The Commission’s three-year review will examine whether that conduct amounts to an abuse of dominance.
The case adds to a busy week for European antitrust enforcement. The Commission issued binding measures against Google on Thursday, requiring it to open Android and its search data to AI rivals, and it has been pursuing actions against other U.S. technology companies on issues ranging from app stores to hardware design. The pattern, analysts said, shows Brussels treating the AI economy as the next front in its long campaign to regulate American tech.
The company’s response has been to point at the market’s own verdict. Broadcom has said its VMware transition is working, that customers are adopting the new model, and that its custom chip business is the result of customers choosing to work with it. The company has argued that the cloud providers’ complaints reflect commercial disputes, not antitrust problems, and that the Commission’s case would be shown to lack merit.
The same day brought a counterweight for investors. Tim Cook, Apple’s chief executive, publicly expressed confidence in Broadcom’s AI chip prospects, praising the company’s custom silicon work in remarks reported this week. Apple is one of Broadcom’s largest customers, and Cook’s comments were read by analysts as reassurance that Broadcom’s position with the most valuable technology company in the world remains strong.
The juxtaposition captures Broadcom’s situation. Its commercial prospects have rarely looked better: AI demand is rising, its custom chip pipeline is full, and its financial results have beaten expectations for several quarters. Its regulatory exposure has rarely looked worse: a three-year European case, complaints from cloud providers, and the possibility that other regulators follow Brussels’ lead.
The stakes for the AI industry are significant. Broadcom’s custom chip business sits at the center of the effort by large AI companies to build their own accelerators rather than buy them from Nvidia. A regulatory case that constrains how Broadcom sells those chips, or how it bundles them with VMware software, could reshape the economics of the custom chip market and the plans of the AI companies that depend on it.
The case will take years to play out. European antitrust proceedings of this kind typically involve extensive document requests, market studies and negotiations, and the Commission’s final decision could be years away. Broadcom has said it will cooperate, and the company has the resources to fight a long battle. The cloud providers have the Commission’s ear, and they have been patient.
For investors, the calculation is familiar. Broadcom’s stock has ridden the AI wave, and its custom chip business is the main reason. Regulatory headlines have periodically dented the shares, and each new development in Brussels produces a dip that buyers treat as an opportunity. Whether that pattern holds will depend on how the case develops.
For now, the company’s position is unchanged: commercially dominant, legally contested, and central to the AI build-out that everyone, including its regulators, is betting on. The three-year clock starts now, and the outcome will help determine not just Broadcom’s future, but the shape of the custom chip industry it helped create.
