Supermarket giant Tesco sues VMware for breach of contract (2025)

Tesco acquired perpetual licenses for VMware's vSphere Foundation and Cloud Foundation products, plus subscriptions to Tanzu products, in January 2021, and agreed to a contract for support services and software upgrades until 2026. However, after Broadcom acquired VMware, it stopped selling support services for software sold under perpetual licenses, forcing Tesco to either purchase new subscription-based licenses or risk losing support. This move has led Tesco to claim that Broadcom's actions have resulted in "excessive and inflated prices" for virtualization software that Tesco has already paid for.

The dispute between Tesco and Broadcom reflects a broader trend in the virtualization market, where companies that have purchased perpetual licenses for VMware software are facing difficulties in obtaining support and upgrades from Broadcom. This issue has already led to similar lawsuits, including one from US telco AT&T in September 2024 and a dispute between Broadcom and Siemens. The fact that Tesco's operations rely heavily on VMware software, with approximately 40,000 server workloads dependent on it, underscores the significance of this dispute. With Tesco posting £69.9 billion in revenue in 2025, the company is likely to use the prospect of a protracted and costly lawsuit as leverage to reset talks with Broadcom.

The outcome of this dispute could have significant implications for Tesco's operations and the broader virtualization market. If Tesco is unable to secure support for its VMware software, it may face disruptions to its ability to supply groceries to consumers across the UK and Republic of Ireland. Furthermore, the lack of support could also impact the security and stability of Tesco's systems, given that Broadcom's patch publication policy means users who don't acquire subscriptions can't receive all security updates. As the dispute continues, it will be crucial to watch how Broadcom responds to Tesco's claims and whether other companies with similar perpetual licenses for VMware software will follow suit.