Broadcom: “Why Europe is so extremely vulnerable”

Author: Uwe Sommersguter
published on 2024/07/04 in Kleine Zeitung

ANALYSIS. The Carinthian cloud provider fell victim to the US company Broadcom, which cancelled long-term contracts and multiplied prices. But Anexia was able to free itself with enormous effort.

“Wake-up call for the software world” is what the specialised media are calling an unprecedented event in Europe that has turned the Carinthian cloud service provider Anexia upside down: “We have been blackmailed by a multi-billion dollar corporation – the eleventh largest in the world,” says Anexia CEO Alexander Windbichler, summing up the drama of recent weeks in an interview with the Kleine Zeitung newspaper. Anexia, a renowned European cloud provider, became the victim of a US corporation – and was able to free itself from its clutches.

The background: VMware’s software is essential for many cloud services, including Anexia, and there is practically no alternative. The takeover by the little-known giant Broadcom therefore caused a worldwide stir in the industry. And rightly so, as Broadcom made short work of its customers and put them under severe pressure. Two days before Christmas last year, as Windbichler emphasises, long-term contracts were “unlawfully” terminated without further ado – with effect from 1 May 2024. The prices for new products were increased by up to twelve times. Anexia would have had to sign a three-year contract, the costs would have increased eightfold and would have been payable in advance. The additional annual costs that would have been incurred by Anexia customers: several million euros. “That was either extremely clever – or extremely stupid,” says Windbichler today.

“Extremely nerve-wracking battle for independence” from Broadcom

However, instead of engaging in what Windbichler calls “attempted coercion” like so many others, the Carinthians set up an emergency team and performed a “heroic deed”, as Windbichler explains today. Since the end of 2023, the entire organisation, around 400 employees, has been subordinated to a single goal: To develop a solution based on so-called “open source” technology by 30 April that excludes any dependency. ” After around 100,000 hours of work within four months, we made a statement for Europe,” explains Windbichler: on 30 April at 23:46, 14 minutes before the deadline (which was extended by a month at short notice), “we left Broadcom”. This battle for independence was extremely “nerve-wracking”, for many employees it was “far beyond the breaking point”. They had “replaced a pacemaker during open-heart surgery”.

In recent weeks, Windbichler has “experienced for the first time how large corporations act, how they play dumb and play dead.” However, the example also shows how important it is for Europe to act sovereignly: “European sovereignty is irreplaceable,” emphasises Windbichler, “but Europe and the US do not maintain a fair partnership of equals.” Anexia managed to free itself from the tentacles of the octopus: “Today, nobody can dictate anything to us anymore.”

However, Windbichler warns that Europe remains extremely vulnerable and could come under massive pressure from cloud providers outside Europe at any time, for example at the urging of US politicians. This risk is even greater than that of a blackout: “Once cloud systems are shut down by the US, we will all realise just how dependent Europe is.” Because then supply chains and payment systems would collapse, warns Windbichler. “In that case, even electricity would no longer help us.”

Read the original article in German on Kleine Zeitung.