Broadcom Inc. (AVGO.US) faces lawsuit from financial giant Fidelity after strong push for "bundled sales" following acquisition of VMware.

A subsidiary of Fidelity Investments has filed a lawsuit alleging that the technology company Broadcom Inc. (AVGO.US) has threatened to cut off its access to key software that has become a core part of the financial company's systems. Unless a judge intervenes to stop it, the company faces the risk of "significant disruptions" and trading interruptions. Fidelity's subsidiary Fidelity Technology Group, based in Boston, claimed in court documents filed publicly last Friday in Suffolk County Superior Court that allowing Broadcom Inc. to terminate its access to the "business-critical" software after January 21 would cause "significant" harm to its operations. Fidelity stated that it has been using "virtualization" software sold by VMware to create, host, and manage virtual servers on its physical servers since 2005. The lawsuit claims that the software has become a core part of Fidelity's operations over time. In 2023, Broadcom Inc. completed its acquisition of VMware and adjusted its product line by repackaging its virtualization products into a "costly" product bundle. Fidelity stated that when it attempted to renew the software, Broadcom Inc. refused to honor its rights under the contract with VMware and insisted on requiring Fidelity to purchase the bundled package. Fidelity has around 50 million customers and manages $17.5 trillion in assets. The company stated that if it is unable to use the software, all of its platforms will experience interruptions, customers will be unable to access their accounts or execute trades, and employees will be unable to use critical internal systems. In a redacted version of the complaint filed publicly last Friday, Fidelity stated, "These disruptions will cause significant harm to Fidelity, its customers, and the broader financial markets." The complaint accuses Broadcom Inc. of breaching the contract. Initially, Broadcom Inc. informed Fidelity that it would lose access to the software after December 22. Fidelity argued that it was "technically impossible" to migrate away from the software before that date and stated that it would take at least 18 to 24 months to complete. Last Friday, Broadcom Inc. agreed in court documents to extend Fidelity's access to the software until January 21 to allow time for the case to be heard by a judge.