The European Commission announces a thorough investigation into Broadcoms vSphere deal
The European regulator warned that the acquisition could cause higher prices, higher quality and less innovation for business customers.
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According to the European competition authority Margrethe Vestager, who talked on Tuesday, the preliminary investigation revealed that the first time that Broadcom was doing its research revealed risks that the success of competing hardware manufacturers could not limit the compatibility of the servers available today with the server virtualization software. The EU set a new date for May 11, 2015, to complete the process of the agreement. That decision to start a research doesn’t indicate that its outcome is predetermined. An analysis of the transaction has already been reported.
Last month, Broadcom formally demanded the EU permission to merge despite months of preliminary consultation with representatives of the European bureaucratic community. With the company’s $61 billion deal, it is expected to reinforce Broadcom’s position in the software market with VMware resources. This is part of a long-term strategy for the purchaser, who primarily used hardware solutions. So, in 2018, the company bought CA Technologies and in 2019, the company Symantec business involved in cybersecurity.
Whether the deal is infuriating the British regulator, who wants to understand whether the acquisition could harm competition in the UK market. Consequently, an investment in the industry was considered possible with respect to the cost and efficiency of the purchase, and the fact that it was a monopoly in its niche, which generated 99 % of the market in 2021. The latter company will offer guarantees to maintain a acceptable price level, unless it does not dispel doubts in the industry. This is the second major deal which the EU regulatory committee is looking at this year. If you know, Microsoft tried to acquire Activision Blizzard Inc. for 69 billion dollars, an investigation is already underway and the decision has not been made yet.
According to Broadcom, its deal has already been approved by the Brazilian authorities, South Africa and Canada. The company expects to close in 2023. Broadcoms series of acquisitions has already antagonized competitor who are concerned about their growing influence. This has led to intense lobbying efforts to counter the tech giants’ growth.
The biggest blow came in 2018, when former President Donald Trump issued an executive order banning Broadcoms from making $117 billion for Qualcomm. This marked the end of the expanded expansion of Broadcoms semiconductors and shifted the company’s focus towards building its software business., and then, as a part of the new strategy, we will try to acquire VMware.
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