Supermarket giant Tesco sues VMware for breach of contract

Goes after Computacenter too, seeks £100 million damages UK supermarket giant Tesco has sued Broadcom for breach of contracts pertaining to its VMware licenses, named Computacenter as a co-defendant, and warned it may not be able to put food on the shelves if the situation goes pear-shaped. Court documents seen by The Register assert that in January 2021 Tesco acquired perpetual licenses for VMware’s vSphere Foundation and Cloud Foundation products, plus subscriptions to Virtzilla’s Tanzu products, and agreed a contract for support services and software upgrades that run until 2026. Tesco claims VMware also agreed to give it an option to extend support services for an additional four years. VMware is essential for the operations of Tesco’s business and its ability to supply groceries All of this happened before Broadcom acquired VMware and stopped selling support services for software sold under perpetual licenses. Broadcom does sell support to those who sign for its new software subscriptions. The supermarket giant says Broadcom's subscriptions mean it must pay “excessive and inflated prices for virtualisation software for which Tesco has already paid,” and “is unable any longer to purchase stand-alone Virtualisation Support Services for its Perpetually Licensed Software without also having to purchase duplicative subscription-based licenses for those same Software products which it already owns.” The complaint also alleges that Tesco’s contracts with VMware include eligibility for software upgrades, but that Broadcom won’t let the retailer update its perpetual licenses to cover the new Cloud Foundation 9. The filing names Computacenter as a co-defendant as it was the reseller that Tesco relied on for software licenses, and the retailer feels it’s breached contracts to supply software at a fixed price. Tesco’s filing also mentions Broadcom’s patch publication policy, which means users who don’t acquire subscriptions can’t receive all security updates and don’t receive other fixes. The retailer thinks its contracts mean it is entitled to those updates. The filing suggests that lack of support is not just a legal matter, but may have wider implications because VMware software, and support for it “are essential for the operations and resilience of Tesco’s business and its ability to supply groceries to consumers across the UK and Republic of Ireland.” “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 filing states. Tesco’s filing warns that Broadcom, VMware, and Computacenter are each liable for at least £100 million ($134 million) damages, plus interest, and that the longer the dispute persists the higher damages will climb. Tesco is not the first organization to sue Broadcom for not extending its support contracts for software acquired under perpetual licenses. US telco AT&T made a very similar complaint in September 2024. A dispute between Broadcom and Siemens covers similar issues. The Register understands several other lawsuits touch on the same issue. Companies the size of Tesco, which posted £69.9 billion ($93.5 billion) revenue in 2025 can comfortably afford to run lawsuits when negotiations don’t go their way and use the prospect of protracted and pricey proceedings as leverage to reset talks. The Register mentions such tactics as Tesco’s filings reveal its operations are dependent on VMware, and a 2019 VMware case study reveals the retailer has used Cloud Foundation for years. Given Tesco has used VMware for so long, replacing it would likely be a more costly and risky endeavor than a lawsuit. If Broadcom has budged when confronted with such suits, The Register’s virtualization desk hasn’t heard about it. In public, Broadcom insists that Cloud Foundation is such a good private cloud stack that it quickly pays for itself, that its subscriptions are therefore good value, and that sticking with perpetual licenses for old software is a fool’s errand. The chips-and-code company also points to strong adoption of Cloud Foundation among its largest customers, and increased revenue from VMware since it took over the company. Vendors of rival private cloud products report strong interest from VMware customers who intend to migrate to an alternative private cloud platform, and point to record numbers of new clients – 2,700 for Nutanix alone over the last year. But The Register expects Tesco and Broadcom will work this out, probably in private, dammit. ®

Supermarket giant Tesco sues VMware for breach of contract

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