Broadcom Inc (NASDAQ:AVGO) is under scrutiny by EU antitrust regulators following complaints regarding changes to VMware's licensing conditions, the recently acquired cloud computing firm. 

EU businesses and a trade group have voiced their concerns, prompting the European Commission to request information from Broadcom for investigation. 

Allegations include sudden policy changes resulting in significant price hikes, re-bundling of licenses, restrictions on license reselling, and refusal to uphold security conditions for perpetual licenses, Reuters reports.

Also Read: Apple, Meta, and Google's Alphabet Under Scrutiny, EU Launches Antitrust Probes

Notably, the Belgian association Beltug and counterparts from France, the Netherlands, and Germany raised these issues with crucial EU figures last month. 

The trade body CISPE, representing Amazon.Com Inc (NASDAQ:AMZN) and 26 European cloud providers, also lodged a complaint against Broadcom for unilaterally altering license terms for critical virtualization software.

In response to the backlash, Broadcom announced adjustments for VMware customers. CEO Hock Tan detailed these changes in a blog post, highlighting a significant VMware Cloud Foundation (VCF) price reduction to encourage adoption. 

The updated pricing model aims to provide comprehensive cloud infrastructure and operations capabilities at a fraction of the previous cost, standardize pricing metrics across cloud providers, and facilitate easier transitions between cloud and on-premise data centers. 

EU regulators have taken action against leading tech companies, levying hefty fines against entities like Google and Microsoft Corp for antitrust violations. Microsoft Corp (NASDAQ:MSFT) came under fire for allegedly leveraging its market dominance by bundling its Teams videoconferencing tool with the Office suite. 

Furthermore, major financial deals, including Microsoft's $10 billion investment in OpenAI, the company behind ChatGPT, Amazon's $1.4 billion merger with IRobot Corp (NASDAQ:IRBT), and Adobe Inc's (NASDAQ:ADBE) $20 billion acquisition of Figma, have all undergone scrutiny by EU officials.

Mizuho analyst Vijay Rakesh noted Broadcom (rated Buy with a price target of $1,625 ) is well positioned with 2024 opportunities with Networking and AI ramps and a strong position in Wireless. He noted its software segment could provide further operating leverage and drive even stronger FCF.

Broadcom stock gained 116% in the last 12 months. Investors can gain exposure to the stock via Pacer Funds Pacer Data And Digital Revolution ETF (NYSE:TRFK) and Amplify ETF Trust Amplify Cybersecurity ETF (NYSE:HACK).

Price Action: AVGO shares traded lower by 1.96% at $1,317.75 on the last check Monday.

Also Read: Nvidia, Broadcom Lead AI Charge: BofA Analyst Tips AMD, Micron as Emerging Contenders in Explosive Market Growth

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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