The United States Department of Justice saw a victory in a major fintech acquisition case that could set the stage for a host of antitrust enforcements.
On Tuesday, the DoJ announced that Visa and Plaid had called it quits on their planned merger. Originally announced almost exactly a year ago, Visa was planning to pay $5.3 billion for the upstart tech firm.
Plaid's ubiquitous software is designed to connect disparate systems of financial data securely. In its November 2020 complaint, the DoJ alleged that Visa was using the acquisition to snuff out competition. Today, Makan Delrahim, of the DoJ's antitrust division, said:
"Visa — which has immense power in online debit in the United States — has extracted billions of dollars from those transactions. Now that Visa has abandoned its anticompetitive merger, Plaid and other future fintech innovators are free to develop potential alternatives to Visa’s online debit services. With more competition, consumers can expect lower prices and better services.”
Tech, in general, has been at the center of turbulent debates over antitrust violations. Shortly before its case against Visa, the DoJ filed an antitrust suit against Google. Meanwhile, the Federal Trade Commission is suing Facebook.
In both cases, the governing bodies argue that the platforms used their access to competitor data and ability to direct buyer traffic to corner the market. But U.S. antitrust mostly derives from the 1890 Sherman Act, which hardly anticipated data becoming the new oil, when oil had not even become the new oil. Meanwhile, for the past two decades, major tech platforms have been the wunderkinder of the American economy, leaving most public officials hesitant to slow their roll.
That special status has come under fire of late, especially since 2016. What we're witnessing now is a major rearmament of the U.S. antitrust apparatus for a new age.