Why Tesco is Taking Broadcom to Court over VMware Deals
Tesco has launched a major High Court lawsuit against Broadcom, alleging that the software giant broke its word and refused to honour long-term VMware agreements after restructuring its licensing model.
The UK retail giant alleges that Broadcom halted standalone support services and demanded massive price increases for its critical VMware infrastructure.
The said infrastructure acts as the digital backbone of the retailer's data centres, using virtualisation software to split physical servers into multiple distinct virtual machines.
This process allows Tesco to run various applications, store huge amounts of data and manage its digital operations efficiently on fewer physical computers.
According to reports by The Register, the UK High Court will not consider the dispute until at least November 2027, with a trial window scheduled between 1 November 2027 and 25 February 2028.
The chain of events
The conflict traces back to a January 2021 contract signed before Broadcom acquired VMware.
Under this agreement, Tesco acquired perpetual licences for VMware's vSphere Foundation and Cloud Foundation products, alongside subscriptions to Tanzu products.
The deal, which involved Computacenter as the reseller and Dell as the distributor, included support services and software upgrades until 2026, with an option to extend the arrangement for an additional four years.
Tesco also utilised some of Broadcom's mainframe software and intended to extend licences and support for those systems as well.
Following the acquisition, Broadcom overhauled its corporate business model. It halted the sale of standalone services for customers who did not adopt its new subscription software bundles.
Consequently, Broadcom was unwilling to extend support for the existing VMware estate of Tesco.
In July 2024, the company presented a strategic proposal covering both virtualisation and mainframe products to alter the terms.
Believing Broadcom was refusing to honour past agreements, Tesco launched legal action in mid-2025, alleging breach of contract and anti-competitive behaviour.
Escalating the pricing proposals
The dispute intensified as the original contract deadline got closer. On 9 January 2026, just 19 days before the existing agreements of Tesco expired, Broadcom offered separate terms for VMware and mainframe software.
Since Broadcom ceased supporting the legacy virtualisation software in January 2026, Tesco was forced to procure temporary third-party support services at a significant expense.
Two further offers arrived from Broadcom in April 2026. One proposal demanded US$23.5m (around £17.4m) for a single year of VMware Cloud Foundation 9.0 and Mainframe Software and Support Services.
Tesco claims this represented a 175% price increase for VMware software and services, and a 350% hike for the mainframe products compared to the rates it believed it was entitled to under the 2021 contract.
The supermarket chain described those price hikes as ‘manifestly unfair and excessive’.
The amended defence of Broadcom rejects this characterisation entirely. It argues that since Tesco has now successfully sourced alternative software suppliers, the retailer cannot easily point to quantifiable losses that would justify damages payments.
According to the filings read by The Register, Tesco remains comfortable with litigating its claims, arguing that the main defence of Broadcom, which claims it cannot support products that do not exist since it reorganised VMware, is weak.
Software migration risks and operational impact
Faced with what it alleges is an abusive conduct of Broadcom, Tesco is now undergoing a complete IT system overhaul to quit VMware and Broadcom's mainframe products entirely.
The supermarket hopes to be off VMware by the end of 2027 at the earliest, though it notes this timeline requires working at an exceptional pace. According to court filings, this rapid exit introduces severe commercial and operational risks to the business.
Tesco explains in the documents that the timeframe in which that migration must be undertaken has created and continues to create operational and commercial risk and at material ongoing cost and disruption to the business.
The risks are not abstract as Tesco relies on Broadcom mainframe software for critical everyday business operations.
The retailer uses the software to order products for its stores and process its payroll. Furthermore, the alternative solutions procured by the retailer offer reduced functionality compared to the original software estate.
Tesco is also worried about data security and protection because the chosen replacement virtualisation product is incompatible with the Veeam and Zerto backup and disaster recovery tools it uses.
Broadcom maintains that migrating to its flagship Cloud Foundation subscription improves efficiency and quickly pays for itself. However, many major clients disagree.
Tesco is not alone in its rebellion as firms like Western Union, GEICO and Computershare are actively ditching VMware.
Even tech partners like Rackspace are reducing usage, while a Belgian school migrated to a local rival to avoid a 400% price hike.
With AT&T settling confidentially and Siemens still litigating, Tesco’s high-profile exit highlights a growing industry backlash against Broadcom's aggressive pricing strategy.
