Tesco moves 40,000 server workloads off VMware, accusing Broadcom of 'abusive conduct'

Tesco, a retail conglomerate headquartered in the United Kingdom, is moving 40,000 server workloads off VMware amid what it describes as 'abusive conduct' from Broadcom, according to recent legal filings. The supermarket chain filed a lawsuit in the UK’s High Court against Broadcom last year, alleging breach of contract over a licensing agreement reached before Broadcom acquired VMware in November 2023.

Tesco's legal complaint, first reported by The Register in September 2025, states that in January 2021 the retailer purchased perpetual licenses for VMware’s vSphere Foundation and Cloud Foundation, a subscription to VMware Tanzu, and support services through 2026 with an option to extend for four additional years. After Broadcom's takeover, the company reportedly refused to honor the existing deal and instead demanded 'excessive and inflated prices' for virtualization software that Tesco had already licensed. Broadcom also barred Tesco from buying support for its perpetual licenses without purchasing 'duplicative subscription-based licenses,' the initial complaint claimed.

Tesco, which reported revenue of 73.7 billion pounds (approximately $98.7 billion) in its fiscal year 2026, has since begun migrating away from VMware and Broadcom's mainframe products. In January 2025, Broadcom stopped supporting Tesco's VMware products, forcing the retailer to pay for third-party support. Tesco also alleged that Broadcom refused to upgrade software or provide security updates to customers without subscriptions.

In a filing from late May 2026, Tesco stated: 'Faced with Broadcom’s abusive conduct, and given the criticality of virtualization and mainframe software and services to its business, Tesco has been forced to incur material costs to procure alternative solutions with reduced functionality, and to migrate to that software in a manner, and on a timeframe, that creates very significant risks to its business.'

If the migration proceeds 'at exceptional pace,' Tesco expects to be completely off VMware by the end of 2027 at the earliest, though the company acknowledged that the accelerated timeframe introduces 'operational and commercial risk' and 'material ongoing cost and disruption.' The case underscores growing tensions between Broadcom and VMware customers following the acquisition, as other large enterprises have also reported significant price increases and licensing changes.