Enlarge / Sasan Goodarzi, president and chief executive officer of Intuit Inc., left, and Kenneth Lin, co-fonder and chief executive officer of Credit Karma Inc., smile during a Bloomberg Television interview in San Francisco, California, on Tuesday, Feb. 25, 2020. Intuit—the software giant behind TurboTax—said Monday it's buying Credit Karma for about $7.1 billion in cash and stock. (credit: Bloomberg | Getty Images)
The announcement earlier this week that Intuit, the financial software giant, would be buying the personal finance company Credit Karma for $7 billion was striking. The tech industry is under more antitrust scrutiny than ever; just a few weeks ago, the Federal Trade Commission announced a broad inquiry into the past decade of acquisitions by the five biggest tech giants, with a focus on mergers that kill off budding rivals. This deal certainly raises that prospect: Intuit and Credit Karma compete on various fronts, and Intuit’s most recent federal filings named Credit Karma’s free tax-preparation software as a threat to its dominant offering, TurboTax. Intuit has said it will keep Credit Karma's service free, and probably needs to promise as much to regulators to get the deal approved.
But antitrust enforcers, whose core responsibility is to keep markets competitive and protect consumers, are not just watching for mergers that kill off rivals. They’re also starting to look more closely at how tech companies acquire and use data. And that seems to be the main event here. The companies themselves have suggested that a driving force behind the merger is Intuit wanting to get its hands on Credit Karma’s stash of user data. Which raises an important question: do consumers benefit from deals where the key asset being sold is their own personal information?
We’re talking about a lot of data here. Credit Karma, whose business is built around a free credit-monitoring app, boasts more than a hundred million users. While those people don’t pay to use Credit Karma, they do turn over their financial information, as well as the kinds of behavioral and location data that other companies, like Facebook and Google, track. The platform’s algorithms then help lenders micro target users with offers for credit cards, loans, and other financial products. Credit Karma gets a cut when users sign up.
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