Alfred Kelly, Visa CEO, speaks at Boston College’s Chief Executive Club lunch on September 27, 2018.
Brian Snyder | Reuters
Visa ended its takeover of Silicon Valley startup Plaid about two months after the Justice Department filed an antitrust lawsuit, as it would restrict competition in the payments industry.
The company said the decision to end the merger was a mutual one.
About a year ago, on January 13, 2020, Visa announced that it was planning to acquire Plaid, valued at $ 5.3 billion – roughly double the startup’s most recent private valuation. Often referred to as the “plumbing” behind fintech companies, the company’s API software enables startups to connect to users’ bank accounts. According to its own information, the company integrates into more than 11,000 banks.
Zach Perret, CEO of Plaid, said in a statement the company will work with Visa as an investor and partner in the future.
The deal got a catch late last year after the DOJ warned that the Visa acquisition could remove an emerging competitive threat. The DOJ cited Al Kelly’s description of the deal as an “insurance policy” in order to neutralize a “threat to our important US debit business”.
The department argued at the time that the deal had the potential to extend a Visa monopoly on direct debit transactions, adding that it “needs to be stopped”.
The DOJ said in a statement Tuesday that the merger termination was “a victory for American consumers and small businesses”.
The lawsuit symbolized a move many tech critics should have taken by the Federal Trade Commission when it approved Facebook’s acquisition of Instagram in 2012 and WhatsApp in 2014.
Now these mergers are re-entering the public debate. Late last year, the FTC and several states filed antitrust lawsuits against Facebook, claiming they had used their market power to suppress competitors before they could become real rivals to the Facebook empire. The suits suggest remedial action that could include Facebook spinning off these two companies.
– CNBC’s Kate Rooney and Lauren Feiner contributed to this report.
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