US Justice Department sues to block HPE’s $14 billion Juniper buy

*Article has been updated to include a joint response from HPE and Juniper to the U.S. DOJ complaint*

After months of speculation, the U.S. Justice Department today sued to block the $14 billion sale of Juniper Networks to Hewlett Packard Enterprise.

The DOJ said reduced competition in the wireless market is the biggest problem with the proposed buy. In its statement, the agency noted that HPE and Juniper are the second- and third-largest providers, respectively, of enterprise-grade WLAN solutions in the U.S. behind market leader Cisco Systems.

“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, 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 be completed, Cisco and HPE would control well over 70% over the U.S. market, and that the deal would eliminate “fierce head-to-head competition” between HPE and Juniper.

AI a centerpiece of HPE’s bid for 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 at the HPE Discover event in Barcelona: “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 at the time. “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 – for example, a divestiture of certain technologies.

Update: HPE and Juniper defend deal

Within hours of the DOJ’s announcement, HPE and Juniper responded to the filing of a complaint with a statement:

“We believe the Department of Justice’s analysis of this acquisition is fundamentally flawed and we are disappointed in its decision to file a suit attempting to prohibit the closing of the transaction. We will vigorously defend against the Department of Justice’s overreaching interpretation of antitrust laws and will demonstrate how this transaction will provide customers with greater innovation and choice, positively change the dynamics in the networking market by enhancing competition, and strengthen the backbone of U.S. networking infrastructure. Consistent with the conclusions reached by all other major antitrust regulators who have reviewed the deal, this transaction brings together two complementary networking offerings and will create a networking player with the scope and scale to more effectively compete with global incumbents. This proposed acquisition will provide customers of all sizes with a modern, secure network built with AI and for AI to ensure a better user and operator experience, and will create more competition, not less.”

Their statement goes on to claim that the acquisition is pro-competitive and will act “as an innovation catalyst for the industry.” HPE and Juniper also stated that they remain fully committed to the transaction and believe they will prevail in litigation and close the transaction.