TurboTax has long been the leader in do-it-yourself tax-filing software. But it has faced increasing competition from a nimble startup, Credit Karma, which has become one of the preferred financial apps for young people by giving out free credit scores and helping them find auto loans and credit cards. And since 2017, it has offered a completely free tax-filing service.
Intuit, the parent company of TurboTax, took note and agreed to spend US$7.1 billion to buy Credit Karma last week. Several legal experts say the deal raises serious antitrust concerns, and see parallels to a 2011 attempt by H&R Block to acquire another DIY tax software company that regulators blocked.
According to Bloomberg Law, the prospect for tech deals may be even weaker now, amid calls for greater federal scrutiny. Increasingly, legal experts are flagging concerns about the harms posed by large companies buying smaller ones before they develop into serious threats.
Intuit is the biggest provider of DIY tax filing software in the US, splitting about 80% of the market with H&R Block, according to Bloomberg Intelligence analyst Julie Chariell. Credit Karma’s market share is only 3%, but it’s growing fast. Founded in 2007, the San Francisco-based company has attracted more than 100 million users, including about half of all U.S. millennials. That’s twice as many as Intuit. Credit Karma’s free tax-preparing business grew by about 50% last year, according to the company.
“There’s no question the acquisition could and should face scrutiny,” said Aaron Edlin, a law and economics professor at the University of California at Berkeley. “There’s a huge concern when the leading firm in an industry such as tax software buys another firm that is competitive, particularly that’s offering free tax software.”
Full Content: Bloomberg
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