Visa CEO Alfred Kelly speaks at the Boston College Executive Club luncheon on September 27, 2018.
Brian Snyder | Reuters
Visa ended its efforts to take over the Silicon Valley Plaid about two months after the Justice Department filed an antitrust lawsuit on the grounds that it would limit competition in the payments industry.
The company said the decision to end the merger was reciprocal.
About a year ago, on January 13, 2020, Visa announced that it intends to acquire Plaid in a $ 5.3 billion deal – roughly doubling the last private valuation of the start-up. The company’s API software, often referred to as the “sanitary facility” behind fintech companies, allows start-ups 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 a hurdle late last year, after the DOJ stressed that the acquisition of Visa could eliminate a competitive national threat. The DOJ cited Visa CEO Al Kelly’s description of the transaction as an “insurance policy” to neutralize “a threat to our important US debit business.”
The department argued at the time that there was potential for the agreement to extend a Visa “monopoly” on debit transactions, adding that “it should be stopped”.
The DOJ said in a statement Tuesday that ending the merger was “a victory for American consumers and small businesses.”
The process symbolized a step that many technology critics say should have been taken by the Federal Trade Commission when it approved Facebook’s Instagram purchases in 2012 and WhatsApp in 2014.
Now, those mergers are back in public discussion. Late last year, the FTC and several states filed antitrust lawsuits against Facebook, claiming that it used its market power to prevent competitors before they could become true rivals of the Facebook empire. The lawsuits suggest appeals that could include forcing Facebook to stop these two companies.
– Kate Rooney and Lauren Feiner from CNBC contributed to this report.
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