DOJ files antitrust lawsuit challenging Visa’s efforts to acquire Plaid

The Department of Justice (DOJ) filed an antitrust lawsuit in California challenging Visa’s planned acquisition of data aggregator Plaid.

Why should we care?
According to the DOJ, the deal would “eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers.” It’s concerned that Visa, the dominant provider of debit services in the U.S., would create or maintain a monopoly. Plaid, however, says the merger would deliver benefits for consumers, and the lawsuit reflects a misunderstanding of its business model. Instead of a competitor to Visa, Plaid highlights that it’s not a payments company, but a data network that helps consumers connect to third-party apps and services. Regardless, the DOJ argues that Visa’s monopoly power in online debit is protected by barriers to entry and expansion. Through Plaid, Visa would gain access to 200 million consumer bank accounts and 2,600 third-party financial apps, raising concerns about its control over the sector.