Broadcom Deal to Buy ‘Switzerland’ of Data Center Software Would Face Swift Antitrust Backlash

Shares of VMware, a major developer of data center software, on Monday rose by 25% on reports that Broadcom, a major developer of microchips for data centers equipment and other devices, wanted to buy it for $50 billion or more. But investors shouldn’t bet on a deal quickly passing muster with antitrust officials, even though the two companies don’t directly compete.

VMware invented and holds a dominant share of the market for software that lets software engineers manage their data center servers from anywhere. VMware’s dominance means that a long list of technology companies, from chipmakers such as Intel to cloud computing providers such as Amazon Web Services, work closely with VMware to make sure their products can operate in tandem. And those companies have a vested interest in making sure VMware, which they view as a neutral, Switzerland-like actor, doesn’t fall into Broadcom’s arms.

Also, Broadcom is currently being investigated by antitrust authorities for allegedly mistreating its chip customers, The Information has reported.