The U.S. Justice Department has settled its anti-trust lawsuit against Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks, removing a key obstacle in HPE’s efforts to be a commanding player in AI networking.
The DOJ lawsuit, filed in January, noted that HPE and Juniper are the second and third largest enterprise wireless networking providers in the U.S., behind only Cisco. The HPE-Juniper merger would “eliminate fierce head-to-head competition between the companies,” the government claimed, resulting in higher prices and lower innovation. Customers would face “two companies commanding over 70% of the market: the post-merger HPE and market leader Cisco Systems.”
The DOJ contended that the rapidly growing Juniper, a leader in AI networking, has introduced innovative tools and lowered wireless costs for customers. This competition forced HPE to cut its own prices and invest in innovation, the DOJ lawsuit claimed, adding: “Senior HPE executives shared this view; one former HPE executive reminded his team that ‘there are no rules in a street fight’ with Juniper and encouraged them to ‘kill’ Juniper when going head-to-head for sales opportunities.”
To settle the lawsuit, the merged company agreed to two actions intended to maintain market competition. HPE must divest its Aruba Instant On wireless business, a networking solution geared for the SMB sector. Additionally, HPE must hold an auction of up to two licenses to Juniper’s AIOps for Mist source code, a key component of Juniper’s networking platform. HPE will retain ownership of the original code, but auction winners will be allowed to rewrite and improve it as they see fit. (The settlement says HPE must facilitate the shift to a new employer of up to 30 Juniper developers who know the Mist AI code.)
While the settlement still requires judicial approval, the companies involved praised the deal. “For the first time, customers will now have a modern network architecture alternative that can best support the demands of AI workloads,” said Antonio Neri, president and CEO of HPE. “The combination of HPE Aruba Networking and Juniper Networks will provide customers with a comprehensive portfolio of secure, AI-native networking solutions, and accelerate HPE’s ability to grow in the AI data center, service provider and cloud segments.”
In theory this forced divesture creates another freestanding market competitor, and the license stipulation allows competitors to access key source code, yet it’s likely that neither action will prevent the new HPE from becoming a top player in the AI networking market.
An acquisition of this size is always a gamble, of course, but this looks like a smart one. The new HPE will be able to combine its longtime expertise in enterprise infrastructure, especially hybrid cloud, with Juniper’s innovative edge in AI networking. That’s a potent combination that enables the company to tap into lucrative markets.
Grandview Research forecasts that the global AI infrastructure market, estimated at $46 billion in 2024, will grow up to $223 billion by 2033. Even more remarkable is the market for AI networking, which is expanding to support technologies ranging from 5G to edge computing to smart cities. The global AI in networks sector is predicted to grow from $8.4 billion in 2023 to $143 billion in 2033, according to the Markets.us research firm.
