Visa CEO Alfred Kelly speaks at Boston College’s Chief Executive Club Lunch on September 27, 2018.
Brian Snyder | Reuters
Visa has ended its acquisition efforts of Silicon Valley start-up Plaid after the Justice Department filed an adversary lawsuit on the grounds that it would limit competition in the payments industry.
The company said the decision to end the merger was mutual.
About a year ago, on January 13, 2020, Visa announced that it planned to acquire Plaid in a $ 5.3 billion deal – double the start-up’s previous private valuation. The company’s API software, often referred to as “plumbing” behind fintech companies, allows start-ups to connect to users’ bank accounts. The company says it is integrated with more than 11,000 banks.
Plaid CEO Zach Perrett said in a statement that the company would work with Visa as an investor and partner.
The deal became an impediment at the end of last year, after the DOJ signaled the elimination of the nascent competitive threat from the acquisition of Visa. The DOJ cited Visa CEO Al Kelly’s description of the deal as an “insurance policy” to neutralize the “threat to our significant US debit business”.
The department argued that at the time a visa was likely to extend a “monopoly” on debit transactions, adding that it should be “discontinued.”
The DOJ said in a statement on Tuesday that the end of the merger was “a win for American consumers and small businesses.”
The lawsuit marks a move that many tech critics say the Federal Trade Commission should have withdrawn when it approved Facebook’s acquisition of Instagram in 2012 and WhatsApp in 2014.
Now, those mergers are re-entering public discussion. At the end of last year, the FTC and several states filed contradictory lawsuits against Facebook, alleging that it used its market power before squashing competitors so that they could become true rivals of Facebook’s empire. The suit suggests measures that may include the need for Facebook to close those two businesses.
– CNBC’s Kate Rooney and Lauren Fenris contributed to this report.
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