Tech

Visa abandoned Plaid’s acquisition after DOJ raised antitrust concerns

Visa CEO Alfred Kelly will speak at Boston University’s CEO Club luncheon on September 27, 2018.

Brian Snyder | Reuters

About two months after the Justice Department filed an antitrust proceeding for limiting competition in the payments industry, Visa ended its efforts to acquire Silicon Valley startup Plaid.

The company said the decisions to end the merger were mutual.

About a year ago, on January 13, 2020, Visa announced plans to acquire Plaid in a $ 5.3 billion worth of transactions. That’s about twice the startup’s previous personal valuation. The company’s API software, often referred to as the “plumbing” behind fintech companies, allows start-ups to connect to their bank accounts. According to the company, it is integrated with over 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 ran into problems late last year after the DOJ pointed out that the acquisition of Visa could eliminate early competitive threats. The DOJ quoted Visa CEO Al Kelly as an “insurance policy” to neutralize the “threat to significant US debit business.”

At the time, the agency claimed that it could extend the “monopoly” of visas in debit transactions, adding that it “must be suspended.”

The Justice Department said in a statement Tuesday that the end of the merger would be a “victory for American consumers and small businesses.”

The proceedings symbolized a step many tech critics say the Federal Trade Commission should have taken when Facebook approved the 2012 acquisition of Instagram and WhatsApp in 2014.

Now, these mergers are once again participating in public debate. At the end of last year, the FTC and several states filed antitrust proceedings against Facebook, claiming that they used their market power to crush their competitors before becoming a true rival to Facebook’s empire. The proceedings are proposing possible remedies, including requiring Facebook to spin off these two businesses.

–CNBC’s Kate Rooney and Lauren Feiner contributed to this report.

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Visa abandoned Plaid’s acquisition after DOJ raised antitrust concerns

Source link Visa abandoned Plaid’s acquisition after DOJ raised antitrust concerns

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