After months of handwringing, the US Justice Department today sued to block the $14 billion sale of Juniper Networks to Hewlett Packard Enterprise.
The department said the reduced competition in the wireless market was specifically the biggest problem with the buy. The Dell’Oro Group recently reported that the wireless LAN (WLAN) revenue is expected to grow 11% in 2025 after a downturn in 2024.
“This proposed acquisition risks substantially lessening competition in a critically important technology market and thus poses the precise threat that the Clayton Act was enacted to prevent,” the DOJ wrote in a statement. “It should be blocked.”
Wireless networking technology is critical in the modern workplace. Millions of
Americans today create and share company resources and access the internet from wireless-enabled devices, the DOJ wrote. “Retail employees wirelessly process payments and log inventory. Doctors access medical records on phones and tablets and track patient care on the go. University students take notes on their laptops and access course materials from classrooms, dorm rooms, and school libraries. As mobile technology has improved and more services have migrated to the cloud, wireless networking technology
in the workplace has become even more essential,” the DOJ stated.
“There are obstacles to existing enterprise-grade WLAN vendors repositioning
or expanding to replace the competition lost from an independent Juniper. Today, only a handful of WLAN vendors are well-positioned to address the most sophisticated use cases. Several smaller WLAN vendors will continue to be disadvantaged due to small sales forces and support organizations, necessary components to developing proven reputations for reliable service that enterprise-grade customers demand,” the DOJ stated.
“Even well-resourced networking companies in complementary networking markets are unlikely to be strong alternatives to Cisco and HPE immediately, as several face reputational headwinds and have not developed the distribution networks for rapid growth in the enterprise-grade WLAN market,” the DOJ stated.
The DOJ said that if the deal were to completed, Cisco Systems and HPE would control well over 70% over the U.S. market and eliminate “fierce head-to-head competition” between HPE and Juniper.
When the deal was announced last January, HPE, said the acquisition would double its networking business by adding a significant, though somewhat overlapping, campus and data-center product lineup. Juniper’s enterprise networking business was the largest of its three core divisions – cloud, service provider and enterprise – in the first quarter of 2022 for the first time in Juniper’s history, and it has continued to grow since then.
The buy is primarily about AI technology for HPE. It would gain Juniper’s cloud-based MIST AI family, which proactively manages wired and wireless networks. During 2024, Juniper integrated the ChatGPT AI-based large language model (LLM) with Mist’s virtual network assistant, Marvis. Marvis can detect, describe and help fix myriad network problems, including persistently failing wired or wireless clients, bad cables, access-point coverage holes, problematic WAN links, and insufficient radio-frequency capacity.
Late in 2024 HPE CEO Antonio Neri said “Networking is one of the core tenants that’s going to enable and advance AI, and that’s not lost on us.”
“AI requires a modern networking foundation, from client to cloud, to connect data, and this foundation will be every bit as important as the silicon in unlocking the power and value AI holds as the world transition to this type of accelerated computing. A high-performance networking fabric is essential, and we are taking our networking position to a new level, one that will disrupt the industry and extend our network and AI expertise by leaps and bounds,” Neri said.
The combination of HPE and Juniper will take the network of the future a giant leap forward, he said.
“The Juniper deal will be an essential piece of the puzzle. Because together, we expect to have a lineup of secure AI-native network solutions to deliver exceptional user experiences across all segments – enterprise, cloud and service providers,” Neri said.
Observers say it is possible for the deal to move forward with some adjustments – say a divestiture of certain technologies. The companies have not responded to the announcement as of this writing.
Source:: Network World