Vmware Must Support Crucial Dutch Govt Agency As It Migrates Off The Platform,judge Rules

Broadcom’s VMware subsidiary must provide a Dutch government organization with continued software support for at least two years while it manages a migration to an alternative platform, according to a court ruling, or else face fines up to €25 million ($29 million).

The Rijkswaterstaat (RWS), the exec arm of the Ministry of Infrastructure and Water Management in the Netherlands, is a vital and key cog in the waterlogged national infrastructure of the country, described by director general Martin Wijnen as having an “existential role in keeping the country liveable.”

It accused VMware parent Broadcom of breaching its obligations when RWS tried and failed to extend a support agreement for its migration off the platform. The migration itself was in response to the virtualization giant’s switch in licensing terms and a large price hike.

You can read the District Court of The Hague’s judgment here (in Dutch).

RWS has been using VMware’s server virtualization platform for more than 15 years, for which the agency purchased perpetual licenses and has until recently always signed support agreements with a reseller covering maintenance and updates for three years.

The software in question includes vSphere, NSX, vSAN, vCenter Server, Aria Automation/Operations (formerly vRealize Suite), and Site Recovery Manager.

Now, the court has ruled that Broadcom must continue to provide support to the org at a reasonable cost while it migrates off the VMware platform, after RWS rejected a new subscription licensing scheme, claiming it would cost 85 percent more just to continue using the same software.

The most recent agreement RWS signed was in July 2021, meaning that its support for the perpetual VMware licenses it owns would end in July 2024. But in the intervening period VMware was bought by silicon-and-software giant Broadcom, which decided to ditch perpetual licenses and force customers onto subscription packages covering both software and support.

Many customers have complained that the new licensing scheme led to sharp increases in their VMware bills, sometimes between eight to 15 times what they were paying previously.

According to the court summary, RWS submitted a request to its reseller in the spring of 2024 for renewal of its support agreement to commence once the existing one expired in July. However, the reseller told the agency that it was not able to furnish it with a suitable offer.

Shortly before the support agreement expired, Broadcom conceded an extension until September 30, on condition that RWS agree to sign subscription licenses. But RWS objected, and the agreement was then extended until November 1.

Analysis commissioned by the agency had concluded that the costs of using VMware products under the proposed subscription licenses would increase from €2,144,466 to €3,966,220 per year, an increase of 85 percent.

Broadcom then offered a support extension of one year beyond the original end date, to expire on July 23, 2025, which was accepted by RWS.

One of the many structures and systems VMS looks after – the Veluwemeer Aquaduct – a water bridge built in 2002 over an artificial lake that was created during the reclamation of eastern Flevoland. The aqueduct on the N302 road connects Flevoland, the world’s biggest human-made island, to the rest of the Netherlands

Following this, the agency informed Broadcom earlier this year that it intended to migrate from VMware to an alternative platform rather than sign a subscription agreement, and presented the firm with proposals for continued support while it makes this move.

Its email said that RWS “cannot afford to be dependent on a party that forces it to switch to their new licensing model” and that it wanted to “phase out” VMware’s products over a period of two to three years.

But the technology giant rejected this approach, and insisted that any further extension of its support agreement was not an option, because it was a one-time concession, that extension was “commercially unrealistic” and that it has now shifted to the subscription model for licensing.

A lawyer for RWS informed Broadcom on April 11 that the agency intended to bring summary proceedings against it, and the judgement was publicly pronounced on June 27.

In the ruling, senior Hague judge Mr HJ Vetter writes that VMware and Broadcom are required to provide support to RWS after 22 July 2025 for a period of two years at the most, to allow it time to phase out its use of VMware’s software. This is in return for payment by the agency (via the reseller) of €1,765,191 per year. The pair are also required to pay RWS a penalty of $250,000 for each day they fail to deliver on this ruling, up to a maximum of €25 million ($29 million).

The move could have wider implications, as there are plenty of other companies in a similar position to RWS, preferring to migrate away from VMware to an alternative in the face of a massive hike in licensing costs, but facing the prospect of having to cough up anyway while they execute their escape.

Cloud lobby group CISPE (Cloud Infrastructure Service Providers in Europe) welcomed the Dutch court’s decision. The organization called for regulators to investigate Broadcom’s licensing changes earlier this year.

“Although this action does not involve a CISPE member we are pleased that the courts have recognised Broadcom’s unfair software licensing terms and forced it to provide full support for perpetual licenses, at prices in line the customer’s prior experience,” CISPE secretary general Francisco Mingorance told The Register.

“It could open the door for the many other European businesses suffering through Broadcom’s brutal imposition of new unfair contracts to force the company to uphold its commitments and promises to them.  What is unfortunate is that it falls to individual companies to pursue legal actions rather than seeing a Europe-wide investigation from the Commission,” he added.

We asked Broadcom for its official reaction to the ruling, but have yet to receive a response. ®

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