US chipmaker Broadcom is set to receive an EU antitrust warning about the effects of its $61 billion bid for cloud computing company VMware, Reuters reported.
The European Commission, the EU’s executive arm, is expected to send a statement of objections to Broadcom soon. The company has been under investigation for its proposed takeover of VMware since last year. The Commission is reportedly concerned that the deal would lead to a reduction in competition in the cloud computing market.
If the Commission decides that the takeover would create a monopoly or lessen competition, it will announce it soon.
Related: EU Antitrust Watchdog’s Pause Broadcom, VMware Probe
The planned merger has been widely criticized by a number of technology experts, who argue that it would create too much market power for one company. This could mean higher prices and fewer choices for consumers, as well as reduced innovation in the cloud computing space.
Broadcom has told the EU enforcer that the presence of Amazon, Microsoft and Google shows that there is strong competition in the cloud computing market.
Reuters reported on Dec. 9 that the Commission was set to open a full-scale investigation into the deal, the second biggest globally so far this year.
The Commission said its preliminary investigation indicates the transaction may allow Broadcom to restrict competition for the supply of certain components by degrading interoperability between VMware software and competitors’ hardware to the benefit of its own hardware.
