Intuit’s attempted $7 billion takeover of accounting package Credit Karma is the subject of an investigation by the US Department of Justice. The cloud-based personal finance software is a direct competitor to Intuit’s own TurboTax product.
The scrutiny is in response to concerns that the buyout of Credit Karma could be giving Intuit an unfair advantage in the accounting software market by effectively eliminating a competitor product. Intuit already held a sizeable 67% of the tax and accounting software market as of 2019.
Government lawyers are said to be concerned that Intuit’s dabbling in the affairs of startup business Credit Karma will also hinder consumers access to free tax preparation tools. Currently, the government department’s review has only gone as far as requesting more information from the two companies.
However, an Intuit spokesman attempted to quash any controversy, saying in a statement that, “By joining forces with Credit Karma, we plan to create a personalized financial assistant that will help consumers find the right financial products that put more money in their pockets. This is a benefit neither company could easily achieve on their own.”
He added: “This combination is not about tax. We are confident in the clear consumer and competitive benefits of our combination and look forward to continued engagement with regulators.”
The investigation goes further though and will be looking into the Free File program, which allows the likes of Intuit’s TurboTax and other tax preparation software companies to offer free tax filing. Although this option is often available, in many cases US consumers are edged towards paid-for packages instead.
When it launched in 2017 Credit Karma experimented with a new business model that offered a raft of free financial services, including its tax preparation software. It makes money by using the resulting customer data to offer the likes of credit cards and other financial products to over 100 million of its members.
Although there is no apparent end date for the investigation by the Department of Justice, Intuit says that it expects to finalize the takeover of Credit Karma by the second half of this year.