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NY Attorney General Probes Capital One’s $35B Discover Deal

By  |  October 23, 2024

New York Attorney General Letitia James has initiated an investigation into Capital One Financial’s proposed acquisition of Discover Financial Services, expressing concerns about the potential ramifications for consumers in the state. James described the deal as having a “significant impact” on New Yorkers, particularly those with subprime credit scores.

The attorney general requested a state court’s approval on Wednesday to issue subpoenas to Capital One as part of an ongoing antitrust probe. James emphasized that the merger could disproportionately affect New York residents, as the two companies collectively hold over $16 billion in credit card loans in the state—Capital One with more than $9.5 billion and Discover with approximately $6.5 billion in loans, according to Bloomberg.

The deal, announced in February, is an all-stock transaction valued at $35.3 billion and is expected to significantly reshape the U.S. credit card industry. Per Bloomberg, the merger would combine two of the nation’s largest credit card issuers, behind only JPMorgan Chase and Citigroup, and would be one of the most notable deals in the sector since the 2008 financial crisis.

Capital One’s founder and CEO, Richard Fairbank, touted the strategic benefits of the acquisition earlier this year, stating, “Through this combination, we’re creating a company that is exceptionally well-positioned to create significant value for consumers, small businesses, merchants, and shareholders as technology continues to transform the payments and banking marketplace.”

Read more: EU Partners with Venture Capital Firms to Boost Tech Investment Amid Global Competition

However, James warned that the merger would create a dominant force among subprime borrowers, a group of consumers already vulnerable due to lower credit scores. The combined entity would control approximately 30% of the subprime credit card market—double the market share of its closest competitor. This level of dominance could limit choices for consumers with subprime credit, potentially leading to higher interest rates or fewer available credit options.

The proposed Capital One-Discover deal has drawn comparisons to other large banking mergers, with the last major consolidation happening nearly five years ago, when BB&T acquired SunTrust in a $28 billion transaction, forming Truist Financial. According to Bloomberg, the Capital One-Discover merger could rival such deals in scale, with broader implications for the U.S. financial landscape.

In addition to their status as major credit card lenders, Discover also operates its own payment network, positioning it as a competitor to industry giants Visa and Mastercard. This aspect of the deal has raised further regulatory scrutiny, as it could potentially reduce competition in the payments sector.

Source: Bloomberg

Zuckerberg Pushes for Settlement Ahead of Antitrust Trial Zuckerberg Pushes for Settlement Ahead of Antitrust Trial

Zuckerberg Pushes for Settlement Ahead of Antitrust Trial

By  |  April 2, 2025

Meta Platforms CEO Mark Zuckerberg is actively lobbying U.S. President Donald Trump and White House officials in an effort to reach a settlement that would prevent the company from facing an upcoming antitrust trial, according to the Wall Street Journal. The trial, scheduled for April 14, could have significant consequences for Meta, including the potential forced divestiture of its acquisitions, WhatsApp and Instagram.

Per the Wall Street Journal, Meta representatives have met with Trump and his senior advisers in recent weeks to discuss the Federal Trade Commission (FTC) lawsuit, which accuses the company of engaging in anticompetitive practices. Zuckerberg himself visited the White House on Wednesday, marking his third visit during Trump’s presidency. However, the Wall Street Journal notes that some White House aides have grown frustrated with Meta’s lobbying approach, viewing it as overly aggressive.

Meta spokesperson Andy Stone commented on the company’s engagement with policymakers, stating, “We regularly meet with policymakers to discuss issues impacting competitiveness, national security, and economic growth.” Meanwhile, White House Press Secretary Karoline Leavitt declined to provide a comment, and an FTC representative did not immediately respond to inquiries.

The FTC’s lawsuit argues that Facebook, now Meta, has maintained its dominance in the social networking space through a long-term strategy of eliminating competitive threats. According to the complaint, the company has engaged in anticompetitive conduct to sustain its monopoly power. While the FTC is an independent agency, Trump has sought to increase executive oversight over such entities, requiring them to submit significant regulations for White House review.

Related: FTC Targets Meta’s Market Power, Calls Zuckerberg to Testify

A person familiar with Trump’s thinking told the Wall Street Journal that the president has not yet made a decision on whether the administration will seek a settlement with Meta. Former FTC Chairman Jon Leibowitz, who served under both the Bush and Obama administrations, commented on the unusual nature of a company approaching the White House regarding an antitrust case. “It is unusual for companies involved in big antitrust lawsuits to go to the White House, but it has happened before,” Leibowitz said. However, he added that he has never seen a White House attempt to influence the FTC’s decision-making process, emphasizing the agency’s independence in such matters.

Zuckerberg’s efforts to engage with Trump follow a history of mixed relations between the two. According to the Wall Street Journal, Meta contributed $1 million to Trump’s inaugural fund and Zuckerberg made visits to Mar-a-Lago during the presidential transition. Additionally, in January, Meta settled a lawsuit Trump had filed against the company over its suspension of his social media accounts following the January 6, 2021, attack on the U.S. Capitol. The settlement resulted in a $25 million payment, with $22 million allocated to Trump’s presidential library fund.

As the April 14 trial approaches, it remains to be seen whether Meta’s lobbying efforts will yield a favorable resolution.

Source: The Wall Street Journal