Tesco sues Broadcom over VMware licensing, warns food supply could be hit

Tesco files £100m lawsuit against Broadcom over VMware licence changes

Tesco is suing Broadcom and technology reseller Computacenter in a dispute over VMware software licences that it says could disrupt its ability to keep food on shelves.

The supermarket chain has filed a claim for at least £100 million in damages, arguing that changes made since Broadcom acquired VMware have left it without the support it contracted for.

According to court documents seen by The Register, Tesco purchased perpetual licences for VMware's vSphere Foundation and Cloud Foundation software in 2021, along with Tanzu subscriptions and support services running until 2026. The contracts also included an option to extend cover for a further four years.

Tesco claims Broadcom has since refused to honour those agreements, insisting instead on subscription-based licences. The retailer argues this forces it to pay "excessive and inflated prices for virtualisation software for which Tesco has already paid," and prevents it from receiving security patches and upgrades to which it is entitled. The filing adds that Broadcom has barred the company from updating perpetual licences to include the latest Cloud Foundation 9 release.

The dispute is allegedly a result of Broadcom's decision to shift VMware to a subscription model and end perpetual license sales following its acquisition of the virtualisation giant. The policy change has sparked widespread criticism, with European customers reporting price increases of up to 1,500% and many receiving cease-and-desist letters over their existing perpetual licences.

The claim also names Computacenter as a co-defendant, alleging that the reseller breached its contracts to provide licences at fixed prices.

Concerns over operations and food supply

Tesco has warned that the dispute is not just about contractual terms but could affect its core operations. "VMware Virtualisation Software underpins the servers and data systems that enable Tesco's stores and operations to function, hosting approximately 40,000 server workloads and connecting to, by way of illustration, tills in Tesco stores," the court papers read. The filing goes further to warn that the lack of support may affect food supply in both the UK and the Republic of Ireland.

The case echoes lawsuits filed against Broadcom by AT&T and Siemens last year, which have also challenged the company's decision to end support for perpetual licences.

The licensing controversy has drawn regulatory attention, with Broadcom making adjustments to its VMware terms as the EU gets involved in investigating complaints from business users. Broadcom has maintained a defensive stance on its approach, arguing that Cloud Foundation subscriptions provide greater long-term value.

The retailer's legal action now tests whether Broadcom's licensing stance can withstand scrutiny in the UK courts.