The US Department of Justice (DoJ) has filed an antitrust lawsuit in order to block Visa's acquisition of Plaid.
DoJ officials claim that Visa is already a "monopolist" in the online debit and payments space, and if the acquisition is allowed to proceed, this would stop Plaid from being able to "challenge Visa's monopoly."
Delaware-based Visa, one of the world's largest financial services companies, announced the purchase of Plaid in January for $5.3 billion[1].
Plaid[2] is a fintech firm, also based in Delaware, that has created an open platform for consumers to connect their bank accounts to financial applications. While not generally a well-known brand, at the time of the announcement, Visa said approximately one in four US bank account holders use Plaid technology to share information and connect to app services.
It was intended that Plaid would continue to operate as an independent company after the deal closed. However, it seems this assurance is not enough to quell the DoJ's antitrust concerns.
According to the complaint[3], filed in the US District Court for the Northern District of California and made public on Thursday, the DoJ alleges that Plaid, now the "leading" financial data aggregation company in the US, intended to build a network that could eventually compete with Visa -- allowing consumers to pay merchants directly using their bank account details, with no need for a debit card.
However, Visa CEO Alfred Kelly viewed the purchase as an "insurance policy" that negated the threat to Visa's existing US debit business. Going further, the complaint claims that the executive convinced the company's board to accept the deal as Plaid, "on their own or [if] owned by a competitor," would eventually become a competing force strong enough to make