Tesco is migrating 40,000 servers off VMware and suing Broadcom for over GBP 100 million

Tesco, one of Britain’s largest supermarkets, is migrating approximately 40,000 servers away from VMware. It is also suing Broadcom in the UK High Court for more than GBP 100 million, accusing the company of “abusive conduct.” It is one of the largest publicly disclosed VMware migrations since Broadcom completed its acquisition of VMware in late 2023.

Tesco purchased perpetual VMware licenses in 2021 with support and software updates until 2026, plus an option to extend for another four years. After Broadcom took over, Tesco says it faced price hikes of around 175% and was forced into more expensive subscription bundles. Broadcom refused to continue standalone support for the perpetual licenses Tesco had already paid for.

“Faced with Broadcom’s abusive conduct, and given the criticality of virtualization and mainframe software and services to its business, Tesco has been forced to incur material costs to procure alternative solutions with reduced functionality,” the filing reads. The company has hired third-party support providers to maintain its VMware environment while it migrates.

Tesco is not waiting for the court case to finish. It has set a deadline of the end of 2027 to complete the migration, choosing to move now rather than depend on a legal outcome. The decision to migrate 40,000 servers while simultaneously suing the vendor reflects how badly the relationship has broken down.

The timing coincides with HPE announcing this week that it will offer customers a free year’s licence for its Morpheus VM Essentials alternative, plus a $1 licence for its Zerto migration software. The VMware exodus is creating a market for alternatives that did not exist two years ago.

Broadcom’s CEO Hock Tan said earlier this month that the company is stepping back from acquisitions because AI revenue is growing fast enough organically. The VMware acquisition was the last big deal in that strategy. For the customers that deal trapped, the growth story looks very different. Tesco is spending money it did not budget to replace software it already owned because the new owner changed the terms.

The case matters beyond Tesco. Thousands of enterprises globally face the same pricing pressure from Broadcom’s post-acquisition VMware licensing changes. If Tesco wins its “abusive conduct” claim, it could establish a legal precedent that constrains how acquirers can restructure the licensing terms of products their customers already paid for. If it loses, enterprises will have confirmed what many already suspect: perpetual licences are only as permanent as the company that sells them.