Supermarket Giant Tesco Sues VMware, Warns Lack of Support Could Disrupt Food Supply (theregister.com) 80
Tesco is suing Broadcom and reseller Computacenter for at least $134 million, claiming that VMware's perpetual license support agreements were breached after Broadcom's acquisition. The supermarket giant warned it "may not be able to put food on the shelves if the situation goes pear-shaped," writes The Register's Simon Sharwood. From the report: 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. 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 virtualization software for which Tesco has already paid," and "is unable any longer to purchase stand-alone Virtualization 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 Virtualization 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 $134 million damages, plus interest, and that the longer the dispute persists the higher damages will climb.
The supermarket giant says Broadcom's subscriptions mean it must pay "excessive and inflated prices for virtualization software for which Tesco has already paid," and "is unable any longer to purchase stand-alone Virtualization 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 Virtualization 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 $134 million damages, plus interest, and that the longer the dispute persists the higher damages will climb.
Locked in (Score:4, Informative)
"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."
So in other words Tesco was negligent in getting core aspects of their business dependent on a single supplier.
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they sell meat they can go to hell
meat runs the world
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Re:Locked in (Score:5, Insightful)
So in other words Tesco was negligent in getting core aspects of their business dependent on a single supplier.
... only because it was agreed they'd have perpetual licenses and options for continued support, which is now denied:
Someone's in breach of contract, and I'm pretty sure it's Broadcom/VMWare, not Tesco.
Re:Locked in (Score:4, Insightful)
He's not claiming Tesco is in breach of contract. He's claiming that they acted unwisely in making their core business dependent on one particular (any particular) supplier. He's clearly right, but "efficiency experts" have been pushing more and more companies in that direction for decades.
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He's not claiming Tesco is in breach of contract.
I'm not claiming he's saying that either - my point is that he seems to be pointing out their dependency on a supplier that's now screwing them over, when it appears they had planned for this supplier to be an actual asset to their business, not a liability.
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my "I'm pretty sure it's Broadcom/VMWare, not Tesco" is meant to imply Tesco has a valid reason to sue, due to Broadcom/VMWare "altering the deal" that had been agreed to, without Tesco having done anything nefarious (though I guess that also remains to be seen).
Re:Locked in (Score:4, Insightful)
I think it would be prudent and potentially cheaper to have multiple backup vendors competing for your business. Instead of having a single vendor that you have to fight a legal battle with, and win, in order to continue your business.
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What are some of the multiple backup vendors over there that they could go to?
Re:Locked in (Score:4, Interesting)
> He's claiming that they acted unwisely in making their core business dependent on one particular (any particular) supplier.
Yes, but which company doesn't? Is there any big company that does not rely on Microsoft products at least to some degree? Nividua GPGPU? Apple products?
Sure, they should have started looking into alternatives when Broadcom bought VMWare, because the writing is on the wall. But on the other hand, they do have a contract that was promised to go up to 2030, and Broadcom is just not caring.
As somebody said, basically all big companies do illegal stuff, or they would not be this big. (And that includes Tesco...)
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Re:Locked in (Score:4, Interesting)
What else did they agree to in that contract? I doubt broadcom's lawyers would be so sloppy as to leave them open to something like this, they likely had a getout clause.
In any case it's still negligent to become dependent on a single supplier irrespective of contracts. Contracts may not be honored for various reasons, including the company going insolvent and simply being unable to do so. Even if the company wilfully breaches the contract what are you going to do, put your entire business on hold pending the outcome of a lawsuit?
You need proper continuity planning and exit strategies in the event of a supplier failing. If it costs $134 million then you've placed your own price on the negligence. It would probably have cost significantly less than that to ensure compatibility with multiple hypervisors, or adopt an open source hypervisor and pay for the worst case scenario that the original developers abandon it and you're forced to maintain it yourself.
Re:Locked in (Score:4, Informative)
negligent
"You keep using that word. I do not think that it means what you think it means."
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I doubt broadcom's lawyers would be so sloppy as to leave them open to something like this, they likely had a getout clause.
That's the purpose of suing them. You can put whatever you want in a contract, but that doesn't mean every part of it will be deemed valid.
You need proper continuity planning and exit strategies in the event of a supplier failing.
On one hand, I agree with you. That's a reason why I don't think it makes sense to be dependent on closed-source software unless you own and maintain it. On the other, vmware used to be the only credible game in town.
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> I doubt broadcom's lawyers would be so sloppy ...
I wouldn't. Broadcom made all these decisions in America and then told the countries to "make it work". Such things go over a lot less well anywhere in Europe than they do in the USA, so it's entirely possible Tesco has a really strong case. If nothing else, I'd say Tesco is a highly competent company, who doubtless has some highly competent lawyers who've been looking at this for quite a while. If they're bringing a case, it's almost certainly got some
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Most business continuity plans have time horizons of hours to maybe weeks.
e.g. a datacenter goes down, you have another but it may take an hour or 3 to migrate all the business processes.
If it's a warehouse fire, you plan to reroute your logistics to serve your customers [or your own stores] with notifications of shortages over the next week or two.
This situation requires months to years.
Most BCPs involve insurance, to cover the losses of revenue or the costs of performing the plan.
I expect that "sue the ba
Re:Locked in (Score:5, Insightful)
A pretty significant proportion of the world's IT infrastructure runs on single source products; from Microsoft to Broadcom to Oracle. Believe me, I'm trying to move our office over to open source where I can, but it's no mean feat.
The real lesson, unless the courts start holding licensors accountable, is that a perpetual license may actually be meaningless, no matter what you paid for it.
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>"A pretty significant proportion of the world's IT infrastructure runs on single source products; from Microsoft to Broadcom to Oracle. "
I was literally getting ready to post the same thing.
Please, all you people saying they shouldn't be dependent on VMWare/Broadcom, how many of you are completely dependent on MS-Windows/MS-Office/Microsoft? Because I bet you all have WAY more dependency on that, than there are people dependent on VMWare/Broadcom or Oracle or any other entity.
Re:Locked in (Score:4, Insightful)
Because I bet you all have WAY more dependency on that...
Tesco is in a very predictable situation (they've been warned for decades), and they should not have made themselves so dependent on a single vendor.
I have zero Microsoft or Oracle dependencies, by the way. I learned the lesson decades ago that depending on them is incredibly stupid.
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Re:Locked in (Score:4, Insightful)
Yes and dependency on MS is just as bad. There's absolutely no guarantee they won't do the same thing or worse, in fact you see signs of that already with them trying to push customers towards subscription models.
There's also political risks - which is why russia, china and now even european countries are trying to eliminate any dependence on ms or other foreign vendors.
People have been saying for years that dependence on proprietary vendors is very dangerous, but there have been many deniers saying "it wont happen" and "we have contracts" etc. Now Broadcom are proving what people have been saying for years.
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A pretty significant proportion of the world's IT infrastructure runs on single source products; from Microsoft to Broadcom to Oracle. Believe me, I'm trying to move our office over to open source where I can, but it's no mean feat.
The real lesson, unless the courts start holding licensors accountable, is that a perpetual license may actually be meaningless, no matter what you paid for it.
TBF, the M&S Single Source Colombian Coffee Beans are pretty damned good. Best you can get at a supermarket or mainstream coffee shop for home use in the UK.
I suspect what has happened here is that Tesco have cut their IT to the bone, got out the angle grinder and ground away at the bone... then sent the remnants of the bone off to an outsourcing outfit who were happy to not upgrade any of their stuff. Now they're in a bind because cyber security is becoming a serious issue and their outsourcers are
Who are you rooting for, exactly? (Score:1)
Seems to me you're actually rooting for broadcom/vmware because reasons....
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If broadcom ceased to exist, Tesco is still screwed.
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If broadcom ceased to exist, Tesco is still screwed.
When I've been involved in somewhat similar contracts, the company I worked for had the full code for the product in escrow, to be released to them in the case that the vendor failed. I don't know if Tesco made it to that level, but they could have been fully prepared for a VMWare failure.
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Indeed.
Interesting fact: With NIS2 / KRITIS, companies similar to Tesco must have a credible replacement strategy for things like that.
VMWare for some is the only choice (full tool set (Score:2)
VMWare for some is the only choice (full tool set / enterprise support)
Proxmox has Veeam now but did not I think last year. But proxmox enterprise support is not at the level of VMware
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But proxmox enterprise support is not at the level of VMware
Depends what you mean by "enterprise support"...
With VMware you are stuck with a large system that requires multiple escalations before you get close to anyone with a proper understanding of the system, and virtually no hope of ever influencing development.
With proxmox you can get more or less direct access to the developers.
There are also multiple other commercially supported hypervisor stacks - oracle, ms, redhat/ibm etc. Yes some of these companies may suck, but as part of a multi vendor strategy to avoi
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"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."
So in other words Tesco was negligent in getting core aspects of their business dependent on a single supplier.
That's kinda true and a good point -- but having multiple suppliers for everything is going to cause other problems and trade offs. But even if in balance it made sense to stick with one supplier, maybe they should have been watching the company like a hawk, and seen this coming...?
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Having multiple suppliers is essential, the trade offs are worth it and most of those trade offs are due to those suppliers putting up artificial barriers to prevent this kind of thing. If the suppliers were forced to play ball then it would make things much easier for everyone.
Tesco sell groceries, like potatoes. Do you think they only have a single potato supplier? They will have many different potato suppliers, so they can still sell potatoes in their store even if some of those suppliers are unable to s
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Ok, yes, and... what kinds of things could they have done with their virtual machine infrastructure? And likewise, what about all the stuff companies build in AWS?
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There are multiple competitors to AWS, and several management tools which allow you to migrate workloads between the various offerings.
Same with local virtualization, there are multiple options.
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Thanks, ok, point taken. :)
they are Tory donors and can go to hell (Score:2)
Tesco invest in climate collapse and VMware wont be the cause of food shortages and crop failure. That will be down to Tesco's investments and the climate wrecking products they sell.
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I think that's a total misread of the situation.
Tesco has a contract with VMware. According to Tesco, VMware/Broadcom is now breaking this contract. The point of litigation is to determine which said prevails in this dispute. Of course, during litigation, Tesco will make many claims to show how important they are, and how insidious VMware/Broadom's actions are, all in support of their position. It doesn't mean that they Tesco could go offline at any second (though that is of course possible).
You later said
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In the age before computers, how did these damn food logistics operations operate?
Yeah. Thought so.
The problem is that these companies have been "saving money" by getting rid of people that regularly did these tasks by hand, telephone, and later fax, replaced those tools with computers, and then decided to save money by only having "one" computer in their entire logistics network do it.
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The problem is that these companies have been "saving money" by getting rid of people that regularly did these tasks by hand, telephone, and later fax, replaced those tools with computers, and then decided to save money by only having "one" computer in their entire logistics network do it.
That's true, however if they failed to do that then their competitors would undercut them on price to the extent that they'd likely go bankrupt. They have little choice.
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No. They made a business decision based on the product, the contract, and the normal business of those contracts.
Then VMWare decided they were not making enough money so changed 2 of those decision making items.
Just switch (Score:2, Troll)
But also sue.
Re:Just switch (Score:4, Insightful)
But also sue.
"Just"
Re: Just switch (Score:5, Funny)
"Let me just write a script to migrate 40,000 VMs to new hypervisors"
clickity-clickity-click
"And they're gone!"
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Cheaper than losing a lawsuit.
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Cheaper than losing a lawsuit.
Not really, you'd need to pay for expertise who can perform a migration and they don't have the budget for that. They spent it all on lawyers.
Their outsourcer doesn't have the talent to perform any kind of migration, they probably don't even have the talent to manage VMWare properly.
The same MBA thinking that told them they could outsource their IT to the cheapest bidder also told them that if anything went wrong they could just use the vendor... They're finding out the hardware that thinking is horri
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The main point of a support structure like the one apparently negotiated here is exactly to provide enough time for a migration to happen, should VMWare or its successor company/companies decide to dramatically change the terms/prices of the products in question.
Like, if VMWare suddenly got 100x more expensive, that's fine -- they'll just move away to something else, but such a migration takes time so they want locked in non-price-gouge rates for enough time to actually do that migration. Additionally, ha
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Had they been smart, they'd have started switching when Broadcom bought VMWare.
"Warns Lack of Support Could Disrupt Food Supply" (Score:3, Insightful)
If that much of the food supply is concentrated into the hands of a single corporation, that sounds like a monopoly that needs to be broken up in the name of national security.
Re:"Warns Lack of Support Could Disrupt Food Suppl (Score:5, Insightful)
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Imagine walmart going tits up overnight in the US. What would be the result?
Milk would be rain down upon the populace in a fashion never seen before in human history!
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Dogs and cats living together... Mass hysteria!
Re: "Warns Lack of Support Could Disrupt Food Supp (Score:2)
There are three Kroger-group stores in my city, two Walmarts, a Target, Hy-Vee, one other grocery chain, two different natural foods-focused stores, and that doesn't even count the convenience stores that sell milk too. This is all in a 100,000 population city.
Plenty of places to get milk. A city half this size should be able to support three choices easily. There are smaller towns around me and some of them might be more limited on grocers, but they are also close enough their residents drive here often fo
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Mountain Home, Idaho has 15k population and they have a Walmart, Albertsons AND a grocery outlet, not counting a few other little no name places.
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People would get to drive an extra 30 minutes for food. Next time, maybe don't live in bumb fuck no where.
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Imagine walmart going tits up overnight in the US. What would be the result?
Fortunately no UK supermarket is nearly as dominant.
Tesco is the largest chain but only holds 28.5% of the supermarket market. There's six other major competitors, Waitrose, Morrissons, Sainsburys, ASDA, ALDI and LIDL.
Even if you removed Tesco, a new equilibrium would find itself soon enough as their suppliers will be able to sell the products they offered to Tesco to other stores. At worst we're looking at a few weeks of good old fashioned British panic buying... Might pop out and get some more loo r
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What the fuck is it with people like you?
Re: "Warns Lack of Support Could Disrupt Food Supp (Score:1)
Making grandiose fear-inducing statements on what is essentially business contact negotiations is the real wtf here.
If this was happening in the U.S. I would wonder if Tesco was trying to bait some Executive Branch assistance from a certain administration.
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Of course that's what it is.
They may as well say, "Warning! Govt, you had better do something or Wesa Allsa Gonna Die!!!"
When you make bad deals, see if you can get the govt to "fix it" for you.
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You think it makes more sense for nations to allow corporations to become too big to fail than to sponsor competition so as to avoid single points of failure?
Re: "Warns Lack of Support Could Disrupt Food Supp (Score:3)
Tesco: 29% ...
Sainsburyâ(TM)s: 16%
Asda: 12%
Aldi: 11%
So, not a monopoly, but a significant market share and significantly bigger than any competitor.
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The UK already does control the relative sizes of supermarkets. None of them are really allowed to have more than about 30% market share - as soon as they do, they have to sell off a few stores or break off a bit of their company or whatever (I think Tesco is pretty much at the 30% level now, but as far as I know isn't yet into those sorts of conversations with the regulator).
I'd also say that in the UK, supermarkets tend to be "everywhere". They're not terribly regional, so every major town or city has som
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If 30% of your food supply stops working, it's going to be a problem for the nation
It's not 30% of the supply, though, it's just 30% of the distribution endpoints.
Whilst the other supermarkets are no slouches, they probably couldn't just soak up the extra they'd have to do to cover it
I don't see why they couldn't. They might have to hire some temp help. It would be an adjustment, but it shouldn't take more than a few days... unless there's something preventing them from bringing on temp workers to cover the higher volume. Ideally they could just hire the Tesco employees who are idled.
Pear-shaped (Score:2)
Don’t piss off Tesco (Score:3)
That’s a lesson many retail suppliers have learned over the years, from SMEs up to Nestle et al. Broadcom aren’t going to like what happens next
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I'd laugh if they just pulled out of the UK altogether.
would anyone notice ? (Score:2)
Now is the time to stock up on popcorn (Score:2)
Just in case.
Who is this warning for? (Score:2)
Re: Who is this warning for? (Score:2)
Tesco are climate killing Tory Donors (Score:2)
Are they going to sue themselves for crop failure and food shortages caused by their propensity for selling gasoline and favouring climate wrecking fossil fuel based single use plastics and products containing palm oil thats led to mass deforestation ?
People in glass houses should not throw stones.
5% chance we will avoid global socio economic collapse in the next 5-15 yrs leading to our extinction and most life on this planet except extremophiles ( if they are lucky ) and Tesco are part of the problem not p
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Ok, I'm making a note to check in with you in 15 years to see how the extremophiles are doing.
goes pear-shaped (Score:2)
I see what they did there.
Corporate code is always terrible (Score:3)