Hewlett Packard Enterprise’s (HPE) acquisition of Juniper Networks required minimal divestitures that many expect will not impact the ongoing entity’s ability to compete in the market and could have been more about saving face for the Department of Justice (DOJ).

As part of gaining DOJ approval for the deal – and avoiding a pending court date to argue out the terms – HPE agreed to license limited access to Juniper’s AI Ops for Mist source code. This will be done via an auction process with the license to be “perpetual, non-exclusive, and include optional transitional support and personnel transfers to facilitate competition,” the DOJ added.

HPE also agreed to divest its Instant On wireless LAN (WLAN) campus and branch network switching business. This includes all of that unit’s assets, intellectual property, research and development employees, and customer relationships “to a DOJ-approved buyer within 180 days,” the DOJ noted in its settlement.

HPE CEO Antonio Neri explained during a press briefing touting completion of the deal downplayed what it agreed to give up.

In terms of the Instant On platform, Neri dismissed that HPE platform as “a very new business unit that we built over the last three years or so, is completely separate from the rest of the traditional HPE-Aruba platform, or Aruba Central, and is [an] unique offer targeting the SMB [small-to-mid-sized] segment of the market, and more specifically the ‘s’ of SMB. It’s a very small business for us.”

Neri was slightly less dismissive of the Mist licensing requirement.

“The license is basically the ability for them to acquire the license, and then obviously we will have to support that license, so the intellectual property obviously stays with us, but we have to be able to support that as we go forward,” Neri said of the Mist license code requirement. “But again, it's only the AI operations portion of the Juniper Mist stack.”

Rami Rahim, who was CEO at Juniper and is now president and GM of HPE’s Juniper-infused networking business, also downplayed that licensing impact.

“We have now over 10 years of learning from real-world deployments, and that is extremely difficult, license or not, to replicate that real-world knowledge of working with some of the largest customers around the world in AIOps and full-stack networking is truly an incredible asset,” Rahim said. “This is essentially part of the intellectual property that Juniper and now HPE networking have gained over the years.”

Analysts did concur with that sentiment, noting the loose nature of the DOJ’s requirements.

“When they do that, how well does HPE have to support it or be easy going?” André Kindness, principal analyst for network serving infrastructure and operations at Forrester Research, told SDxCentral in an interview. “So they sell it, but the question is how difficult they make this for companies to buy into?”

Siân Morgan, research director at Dell’Oro Group, also explained in a blog post that acquiring the license is only one step in trying to compete in the market.

“This may present an interesting opportunity for two American companies, but it is only a small piece of a successful enterprise IT strategy,” Morgan wrote. “The formula for competing with Cisco must involve a complete networking portfolio of hardware and software, along with a well-developed channel. A license to Mist source code can only go so far.”

Why this settlement?

Kindness, who was clear that he did not have any specific legal expertise in the case, noted that the settlement terms indicated the DOJ might not have had a full view of market dynamics.

“I think the Instant On was, in my perception, the Department of Justice didn’t know the product lines that well and how much revenue they bring in … and I'm sure HPE didn’t need to divulge that, and maybe [the DOJ] didn't dig into it, so I think they threw that as chum in the water or making the Department of Justice feel better about that one,” Kindness said. “I think HPE just threw it out there … because it wasn’t big and maybe placated the DOJ, like, ‘hey, we will get rid of some product line.’”

Despite the shade, the concessions did seem to hit at the DOJ’s stated opposition to the deal, which was concern that HPE and Juniper’s current No. 2 and No. 3 market position in the WLAN market would hurt market choice and innovation.

Jennifer Rie, senior litigation analyst for antitrust at Bloomberg LP, explained that details on the approval agreement showed DOJ concern over its case against HPE.

“I think on both sides, a settlement was probably a smart thing,” Rie said. “The case was a very close call. The DOJ had some points and some aspects of the data available to them that was in their favor, but they also had weak spots. And so it wasn't necessarily a slam dunk for the DOJ, at least based on what we knew going in.”

The uncertainty fed into an all-or-nothing gambit that the DOJ did not want to chance.

“They have the divestiture and a licensing agreement, and it's along the lines of what the Justice Department has said they require in a settlement. They prefer something that's structural over something that's behavioral, and they were able to get that here,” Rie said. “Obviously, if the DOJ lost in court, it would allow the deal to go forward completely in full with no settlement, which, according to the DOJ, could harm the market. … The DOJ can now say ‘this was not a surefire win for us. It wasn't a slam dunk. We had some good points to make, but we also had weaknesses in our evidence. It could have gone either way, and this way we got something rather than getting nothing.’”