The U.S. Department of Justice (DOJ) is expected to file a significant antitrust lawsuit against Visa Inc., alleging that the payment card services giant illegally monopolized the nation’s debit card market. The lawsuit, slated to be filed in federal court, accuses Visa of engaging in anticompetitive behavior to maintain dominance in the debit card market. Claims against Visa include allegations of forging exclusive agreements to impede rival networks and hindering technology companies from entering the market. This legal action stems from years-long investigations into Visa’s operations, which were triggered by the company’s failed acquisition of Plaid Inc. in 2021.
News of the impending lawsuit has caused Visa’s shares to decline by as much as 1.95 percent in after-hours trading, reflecting concerns about the potential consequences of the case. One key point of contention in the DOJ’s case is Visa’s practices related to “tokenization” technology, which enhances payment security by replacing card numbers with unique tokens. The Justice Department has been examining how Visa charges merchants who do not use its tokenization service, particularly focusing on pricing structures. Mastercard faced a similar scrutiny last year, settling an enforcement action brought by the Federal Trade Commission (FTC) over its tokenization technology procedures. Visa introduced its tokenization service in 2014 and has issued over 4 billion tokens, emphasizing enhanced payment security and reduced friction in the payment process.
The antitrust case against Visa aligns with increased regulatory scrutiny on Big Tech and financial service companies under the Biden administration. The DOJ recently began a trial against Google, accusing the tech giant of illegally monopolizing the U.S. market for digital ads. A federal judge ruled that Google violated U.S. antitrust laws by maintaining a monopoly in online searches. Attorney General Merrick Garland hailed the victory against Google as an historic win and emphasized that no company is above the law. The Visa and Google cases highlight the Biden administration’s commitment to antitrust enforcement as a cornerstone of its economic policy, with its potential efficacy likely to be influenced by the outcome of the 2024 presidential election.
Ohio Senator JD Vance, a former running mate of President Donald Trump, has advocated for stricter rules on mergers and proposed antitrust solutions to address the behaviors of large tech platforms. Vance’s views align with the belief that the FTC Chair Lina Khan, a key figure in the Biden administration’s push for increased competition and reduction of high prices and low wages, is leading the way towards stronger antitrust enforcement. However, some Democratic megadonors, such as Barry Diller and Reid Hoffman, have expressed hope that Vice President Kamala Harris, if elected president, would replace Khan as FTC chair, indicating a potential shift in the administration’s aggressive antitrust stance. The future of antitrust efforts may hinge on developments leading up to the 2024 presidential election.
