U.K. supermarket leader Tesco has filed suit against Broadcom, VMware, and reseller Computacenter, alleging breach of contract after Broadcom halted support for VMware software sold under perpetual licenses. The retailer warns the dispute could jeopardize core IT systems that underpin its stores and logistics, raising the prospect of disrupted grocery supply across the U.K. and Ireland.
At the center of the complaint are VMware products that Tesco purchased in 2021: vSphere Foundation and Cloud Foundation perpetual licenses, supplemented by Tanzu subscriptions, with multi-year support and upgrade rights running through 2026 and an option to extend a further four years.
Tesco argues those agreements guaranteed access to upgrades and security patches. Following Broadcom’s 2023 acquisition of VMware and its pivot to subscription licensing, perpetual-license customers can no longer buy standalone support, and access to some patches and fixes is tied to new subscriptions. Tesco contends that amounts to paying twice for software it already owns.
Mission Critical
The retailer says VMware software is mission-critical, hosting some 40,000 virtual workloads that connect store tills and run back-end systems for inventory and logistics. In court filings, Tesco seeks at least £100 million in damages from each of Broadcom, VMware, and Computacenter. Computacenter is named because it sold the licenses and, according to Tesco, failed to honor fixed-price and support commitments.
A key point of contention is upgrade eligibility. Tesco maintains its contracts include upgrades to new versions but alleges Broadcom won’t allow its perpetual licenses to be updated to Cloud Foundation 9. The grocer also points to Broadcom’s patch policy, which limits certain security updates to subscription customers, as a contractual breach with direct operational risk.
Broadcom’s licensing overhaul has, to be sure, spurred a broader industry backlash. AT&T sued Broadcom last year on similar grounds. In a separate case, a Dutch court ordered VMware and Broadcom to keep supporting Rijkswaterstaat, the Netherlands’ infrastructure agency, until it migrates away. Clearly, licensing changes can collide with public-sector continuity requirements. Regulators have taken notice as well: European antitrust scrutiny of Broadcom’s post-deal practices dates back to 2024.
Broadcom, for its part, has insisted the subscription-based Cloud Foundation stack offers superior value over time and has touted strong adoption among large enterprises. The company argues that clinging to outdated perpetual licenses saddles customers with higher lifecycle costs versus modern private-cloud subscriptions. That message appears aimed at its largest accounts, where Broadcom says uptake and revenue have grown since the acquisition.
The Headache of Vendor Lock-In
The strategic stakes for Tesco are substantial. Swapping virtualization platforms (perhaps to Nutanix or an open-source alternative) would be a multiyear effort laden with risk for a retailer that runs tens of thousands of VMs across stores, data centers, and distribution hubs. The potential headaches involved helps explain why some large customers are opting to negotiate or litigate rather than rip and replace. Still, the competitive landscape has shifted: rival vendors report heightened interest from VMware shops reconsidering their roadmaps amid licensing frustration.
Less visible but just as consequential is the reseller layer. By drawing Computacenter into the suit, Tesco highlights the contractual complexity of enterprise software procurement, where obligations can straddle vendor and partner shifts. If the court sides with Tesco on support and pricing guarantees, the ruling could ripple through how resellers structure VMware renewals and extensions under Broadcom’s new regime.
