Visa Inc. today abandoned its $5.7 billion acquisition of financial technology startup Plaid Financial Inc. following a lawsuit from the U.S. Department of Justice challenging the deal on antitrust grounds.

The deal was announced in January 2020 and the Justice Department was first reported to be investigating the acquisition in October. The probe resulted in the department announcing in November that it was suing Visa on the grounds that the deal amounts to an attempt to eliminate a nascent competitive threat in violation of both the Sherman Antitrust Act and the Clayton Antitrust Act.

Founded in 2013, Plaid offers a financial application programming interface that connects apps and services with financial services. The company provides the technology that links apps and services such as Transferwise Ltd., Venmo Inc., Robinhood Markets Inc., Betterment LLC and Chime with traditional financial service providers. Although it’s not a household name, one in four people with a U.S. bank account is said to have used Plaid to connect their accounts with more than 2,500 digital finance products.

It’s alleged that Visa saw what Plaid offers as having the potential to threaten one of its core businesses, online transactions. By acquiring Plaid, the Justice Department argued, the transaction would have enabled Visa to eliminate the threat to its online business thereby enhancing or maintaining its monopoly.

“American consumers and business owners rely on the internet to buy and sell goods and services, and Visa – which has immense power in online debit in the United States — has extracted billions of dollars from those transactions,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said in a statement. “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.”

In a separate statement, Visa Chief Executive Al Kelly said he believed that the companies would have eventually won a legal battle because Plaid’s services were complementary to Visa’s. “However, it has been a full year since we first announced our intent to acquire Plaid and protracted and complex litigation will likely take substantial time to fully resolve,” he said.

Zachary Perret, co-founder and CEO of Plaid, wrote in a blog post that “unfortunately, the pace of a multiyear regulatory review is not compatible with the fast-moving realities of a startup – and delaying close another year or more is not in the best interest of our customers, the financial system, or consumers themselves.”

Plaid certainly shouldn’t have any issues as a standalone company, although there is nothing actually stopping Visa now from competing with it directly. According to Crunchbase, Plaid has raised $309.3 million in venture capital funding from firms including Andreessen Horowitz, American Express Ventures, GV, Kleiner Perkins, Goldman Sachs, Norwest Venture Partners and Index Ventures.

Image: Plaid