Visa CEO Alfred Kelly speaks at the Boston College Executive Club lunch on September 27, 2018.
Brian Snyder | Reuters
Visa ended its efforts to acquire Silicon Valley start-up Plaid, about two months after the Justice Department filed an antitrust lawsuit, saying 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 – almost double the start-up’s last private valuation. The company’s API software, often referred to as the “plumbing” behind fintech companies, allows startups to connect to users’ bank accounts. The company says it integrates with more than 11,000 banks.
Plaid CEO Zach Perret said in a statement that the company will work with Visa as an investor and partner in the future.
The deal hit an obstacle last year after the DOJ pointed out that the acquisition of Visa could eliminate a nascent competitive threat. The DOJ cited Visa CEO Al Kelly’s description of the business as an “insurance policy” to counteract a “threat to our important US debt business”.
The department argued at the time that there was potential for the business to extend Visa’s “monopoly” on debit transactions, adding that “it should be stopped”.
DOJ said in a statement on Tuesday that the end of the merger was “a victory for American consumers and small businesses”.
The lawsuit symbolized a move that many tech critics say should have been taken by the Federal Trade Commission when it approved the acquisitions of Instagram on Facebook in 2012 and WhatsApp in 2014.
Now, these mergers are coming back into public discussion. At the end of last year, the FTC and several states filed antitrust lawsuits against Facebook, claiming that it used its market power to crush competitors before they became true rivals to the Facebook empire. The lawsuits suggest solutions that could include requiring Facebook to dismember these two companies.
– Kate Rooney and Lauren Feiner from CNBC contributed to this report.
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