Analyst(s): Ron Wesfall
Publication Date: February 4, 2025
The US Department of Justice has sued to block Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks, citing concerns over reduced competition and weakened innovation in the WLAN market. However, HPE and Juniper argue the merger will enhance overall competition, including against Cisco, drive AI-native networking innovation, and strengthen US tech infrastructure.
What is Covered in this Article:
- The DOJ’s lawsuit blocking HPE’s $14 billion acquisition of Juniper and its antitrust concerns.
- HPE and Juniper’s argument that the deal strengthens competition against Cisco.
- How blocking the deal could reinforce Cisco’s dominance rather than reduce market concentration.
- What the legal battle means for regulatory enforcement and global market dynamics.
The News: The US Department of Justice (DOJ) has filed a suit to stop HPE’s proposed $14 billion acquisition of Juniper Networks, claiming that the deal would remove critical competition in the enterprise Wireless Local Area Network (WLAN) market. According to the DOJ, now that HPE and Juniper are the second and third-largest respective players in the field, bringing them together would lead to a highly-concentrated market with Cisco and a post-merger HPE controlling more than 70% of the field. The suit claims that reduced competition would ultimately result in higher prices, reduced innovation, and fewer options for enterprises dependent on enterprise-grade wireless networking solutions.
The DOJ’s decision is strongly contested by both HPE and Juniper, which have called the analysis “fundamentally flawed” and insisted the acquisition would add to competition by creating a US-based networking competitor able to take on Cisco’s long-standing market leadership. The companies also highlight that antitrust regulators in 14 separate jurisdictions have already approved the deal, with only the European Commission and the UK’s Competition and Markets Authority (CMA) yet to do so, apart from the US and Israel. HPE and Juniper intend to contest the DOJ lawsuit, arguing that the merger will propel new AI-native networking progress and provide a more competitive alternative to Cisco’s position of market prominence.
DOJ Blocks HPE’s $14 billion Juniper Deal – A Competitive Setback or Market Win?
Analyst Take: HPE’s bid to acquire Juniper Networks represents one of the most significant M&A battles in the US networking sector. At its core, the DOJ’s action points to a debate about the trade-off between market consolidation and competitive innovation. According to the Justice Department’s contention, the tie-up would combine HPE – the second-largest WLAN supplier – with Juniper – the third-largest – and would leave US enterprises with a duopoly controlled by the post-merger HPE and Cisco Systems, which would hold nearly 70% of the market. This concentration, they argue, would quash competitive pricing and innovation.
HPE and Juniper’s Competitive Rationale
HPE’s proposed acquisition of Juniper is driven by the increasing importance of AI-native and cloud-driven networking. Juniper’s Mist AI platform, which competes with Cisco Meraki and HPE Aruba’s Edge Services Platform, has been a disruptive force in the industry. By integrating Juniper’s AI-powered networking capabilities with its own, HPE aims to create a next-generation networking portfolio that enhances automation, security, and performance for enterprise customers, which is expected to expand customer choice rather than limit it and offer them a stronger alternative to Cisco’s long-standing grip on the sector.
On a broader level, the complementary portfolio is expected to fortify the American “core tech” sector, which underpins national security and economic competitiveness. The combined company would invest heavily in AI-driven and cloud-native solutions and is likely to better compete with global incumbents, positioning the US as a leader in secure and scalable networking.
Upon the initial announcement of the deal in January 2024, I found that with HPE and Juniper Networks embarking on this journey together, the tech community would eagerly anticipate the developments. This merger could change the dynamics of the networking market, offering customers and partners a new, compelling alternative. It represents an important inflection point in the industry that could redefine how businesses connect, protect, and analyze their data from edge to cloud.
I believe HPE’s acquisition of Juniper Networks is a strategic decision that can transform the networking landscape per DOJ approval. By combining their strengths, these two industry stalwarts are set to usher in a new era of AI-native and cloud-native networking solutions, driving innovation and value for customers and shareholders alike. Looking ahead, the focus will be on HPE’s ability to harmonize these diverse assets while maintaining the trust and satisfaction of its expanded customer base.
A Misplaced Antitrust Concern?
The DOJ’s case hinges on the assumption that an HPE-Juniper merger would stifle competition and innovation in the WLAN market. However, this overlooks the fact that Cisco already holds an outsized market share, and the acquisition would actually strengthen competition by creating a more formidable rival. Partners in the networking space have expressed surprise at the lawsuit, noting that blocking the deal could unintentionally reinforce Cisco’s dominance rather than curb market concentration. Additionally, the DOJ’s argument that three companies have a monopoly in the WLAN marketplace is misleading – at least eight companies actually have a presence in the marketplace, making it far more competitive than alleged in the suit.
Overall, I find it vexing that the product area which is the focus of the DOJ’s suit – Wireless Local Area Network (WLAN) – is intensely competitive and diverse. The acquisition should prevail as I find this a most slender reed to oppose the completion of the deal.
This development is somewhat ironic as the UK Competition and Markets authority and the European Union have already cleared the deal, as on many occasions both have opposed mergers and acquisitions that had already passed US DOJ antitrust scrutiny.
Of note, HPE offers six product brands including HPE Cray Supercomputer, HPE Proliant Compute, HPE Altera Storage, HPE Ezmeral Software, and HPE Services alongside HPE Aruba Networking which houses the WLAN assets. Juniper Networks offers 10 product areas consisting of Wired Access, SD-WAN/SASE, Routing and Switching, Security, Mist AI, Management Software, Network Operating System, Blueprint for AI-Native Acceleration, and Optics alongside its Wireless Access solutions that delivers its WLAN assets.
The DOJ did not target the non-WLAN product lines of either HPE and Juniper, indicating the DOJ does not see the threat of decreased competition or diminished innovation in these areas. This could lead to speculation that HPE could end up spinning off its WLAN assets (or perhaps Juniper) to gain final approval from the DoJ. Presumably, Cisco would be disqualified as a potential bidder given the DoJ’s WLAN market segment concentration concerns, although I expect potential bidders for HPE or Juniper WLAN assets would not be an issue.
The Cisco Factor: Who Really Benefits?
If the DOJ blocks the HPE-Juniper deal, Cisco stands to gain the most. Already the market leader, Cisco’s networking revenue is nearly three times the combined sales of HPE and Juniper. Instead of reducing competition, blocking this deal could cement Cisco’s dominance.
Industry partners argue that the DOJ’s stance is misguided, as an HPE-Juniper tie-up would increase competition and innovation, forcing Cisco to refocus on its core networking business. Cisco may have prioritized expanding its security presence, as seen in its $28 billion acquisition of Splunk in March 2024, rather than driving networking advancements. If the deal is blocked, partners warn that Cisco’s market position will remain largely unchallenged, potentially limiting networking innovation including AI-native networking innovation.
The Road Ahead: Legal Battles and Industry Impact
With approvals secured from 14 international regulators, including the EU and the UK, HPE and Juniper are preparing for a legal showdown with the DOJ. A prolonged battle could stall the deal, creating uncertainty for customers and partners. Notably, the DOJ’s lawsuit contradicts expectations that the new administration would be more M&A-friendly. Analysts and industry insiders had anticipated a regulatory climate favoring consolidation, making this move surprising. If the lawsuit succeeds, it sets a precedent that could chill future tech acquisitions, raising broader concerns about the DOJ’s approach to antitrust enforcement and its real impact on competition.
What to Watch:
- If the merger proceeds, Cisco may ramp up investments in AI-native networking to counter the combined HPE-Juniper entity. If blocked, Cisco’s dominant market position remains intact, potentially reducing pressure to innovate aggressively or compete on price points.
- The lawsuit runs counter to expectations of a more M&A-friendly environment under the new administration. A DOJ victory could signal tougher antitrust enforcement, impacting future acquisitions in networking, cloud, and AI.
- Despite DOJ resistance, 14 international regulators—including the EU and UK—have cleared the deal, reflecting a stark contrast in antitrust perspectives. This could fuel debates on whether US regulatory enforcement is misaligned with global market realities.
- If the merger fails to go through, HPE may accelerate its internal AI-driven networking development, enhancing Aruba’s Edge Services Platform (ESP) to counter Cisco Meraki and Juniper Mist.
See the complete Hewlett Packard Enterprise press release on its response to the DOJ lawsuit.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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Author Information
Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.
He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including a wide range of topics across software and services, infrastructure, 5G communications, Internet of Things (IoT), Artificial Intelligence (AI), analytics, security, cloud computing, revenue management, and regulatory issues.
Prior to his work with The Futurum Group, Ron worked with GlobalData Technology creating syndicated and custom research across a wide variety of technical fields. His work with Current Analysis focused on the broadband and service provider infrastructure markets.
Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.