The U.S. Justice Department Thursday filed its first major lawsuit under the new Trump Administration, an antitrust action seeking a halt to a proposed $14 billion merger between Texas-based Hewlett Packard Enterprise Company and wireless provider Juniper Networks Inc.
The lawsuit is the result of an investigation that began under the Biden Administration when HPE announced the deal more than a year ago. The lawsuit, filed in the Northern District of California, alleges that the two companies represent the second and third largest providers of wireless access points — enterprise WLAN (wireless local area networks) — in what is already a highly consolidated market led by Cisco Systems Inc.
The lawsuit describes Juniper as “a smaller, but innovative rival” whose Juniper Mist networking product and its creative uses of artificial intelligence have bedeviled HPE’s Aruba brand in head-to-head competition:
“For years, pressure from Juniper has forced HPE to discount deeply and invest in developing advanced software products and features as part of a multifaceted campaign to ‘Beat Mist.’ The ‘Beat Mist’ campaign failed,” according to the DOJ complaint.
“Having failed to beat Juniper’s Mist on the merits, HPE seeks to acquire Juniper instead for $14 billion. This proposed acquisition risks substantially lessening competition in a critically important technology market.”
“It should be blocked,” the DOJ petition said.
In a joint statement, HPE and Juniper said they are “disappointed” in the Justice Department’s decision to litigate the antitrust issue.
“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,” the companies said.
The companies described the government’s description of a WLAN marketplace dominated by three market leaders (Cisco, HPE and Juniper) as “substantially disconnected from market realities.” The companies said the market includes well-capitalized competitors, several of which hold market shares comparable to that of Juniper.
Moreover, the rapid integration of artificial intelligence into the design and operation of WLAN connectivity, said the companies, has leveled the field of competition.
“As customers shift to AI and cloud-driven business strategies for secure, unified technology solutions to protect their data, barriers to entry have decreased and expansion and competition for WLAN has intensified. As such, WLAN is an extremely competitive market with a broad set of players, all of whom are fighting for business and winning bids in competitive RFP processes.”
HPE is headquartered in Spring, Texas; Juniper is in Sunnyvale, California.
The lawsuit describes in some detail HPE’s efforts to compete with Juniper Networks, including a company-wide collaborative list-serve and mandatory in-house training to update its sales teams on Juniper’s creative use of AI. The intensity of the campaign is highlighted by the urging of one HPE vice president to consider the competition a “street fight.”
“There are no rules in street fights,” he remarked, concluding: “KILL MIST!!!!!!…”