18 October, 2024
Spain's antitrust watchdog fines Booking.com nearly $450M for unfair terms and restricting rivals
Spain’s competition authority, the CNMC, has found that online travel agency Booking.com abused a dominant market position over the past five years. It fined the company €413.24 million (or around $447 million at current exchange rates) on Tuesday.
The CNMC opened an investigation of Booking.com back in October 2022, following complaints by the Spanish Association of Hotel Managers and the Regional Hotel Association of Madrid. The watchdog’s probe confirmed that Booking imposed unfair terms and conditions on hotels that the authority said made it difficult for rival travel agencies to compete.
Booking.com held a share of between 70% and 90% of the market in Spain for provision of online booking intermediation services to hotels by online travel agencies over the period in question.
“The company has committed two abuses of its dominant position since at least January 1, 2019 until today by imposing various unfair commercial conditions on hotels located in Spain that use its booking intermediation services and restricting competition from other online travel agencies… that offer the same services,” the CNMC wrote in a press release [in Spanish; this is a machine translation].
The authority concluded that Booking imposed an unfair price clause on hotels using its platform that prevented them from offering their rooms on their own websites for less than the price offered on Booking.com, even as the platform reserved the right to unilaterally reduce the price hotels offer through its website or application.
The CNMC also found fault with issues related to clauses pertaining to the company’s general terms, stating that only an English version of the terms had legal value whereas both the law applicable to the terms, and the competent courts, are of the Netherlands, where Booking is headquartered. This made it more expensive than it should be for Spanish entities to take Booking to court in the event of a dispute.
Additionally, the investigation findings call out a lack of transparency around the value Booking provided hotels via a series of subscription products that allow hotels to improve their position in the platform’s default rankings in exchange for paying higher commission fees or offering some of their rooms at discounted rates.
The CNMC said Booking was able to abuse its dominant position by restricting competition from other online travel agencies by using the total number of reservations for a hotel through its platform as a ranking criterion in the default search results lists, thereby encouraging hotels to concentrate their online bookings on Booking.com.
The authority’s findings also highlight the use of a performance requirement by Booking that it used as a criterion for hotels accessing and remaining in two of the aforementioned subscription programs — but which it found to be based “primarily on the profitability of each hotel for Booking.com.”
“This encourages hotels that want to access or remain in the programs to follow a pricing and availability policy that leads them to concentrate their sales on the platform, to the detriment of other competing agencies,” the CNMC added.
The sanction imposed by the Spanish authority breaks down into two penalties of €206.62M apiece for each of the abuses of a dominant position. The first is the unfair T&Cs imposed on hotels in Spain, and the second being the restriction of competition from other online travel agencies.
The authority has also imposed behavioral obligations on Booking, which require it to stop the infringing conduct and ensure it does not engage in any other similar conduct that could product an equivalent effect in the future.
Booking.com has been contacted for a response to the CNMC’s sanction. The company may appeal the sanction before the National Court but must do so within two months.
Update: Company spokesperson, Allison Voight, emailed this statement in which Booking writes: “We strongly disagree with the outcome of the CNMC investigation and intend to appeal this unprecedented decision. We have said before that the EU’s Digital Market Act is the right forum to discuss and assess the majority of these issues, presenting an opportunity to agree on solutions that apply across Europe rather than country by country.
“Booking.com operates in a highly competitive sector, and in an industry characterized by a high degree of choice for businesses and consumers alike. We offer accommodation partners support programs such as our Preferred Plus and Genius that they can opt into. The decision today by the CNMC does not take this into account, adding to a lack of consistency for consumers and accommodation partners in Spain, against a global backdrop.”
Beyond Spain, the European travel giant is facing tighter regulation across the EU in the coming months, following its designation as a gatekeeper under the bloc’s Digital Markets Act back in May. It will be expected to be compliant with that regime by mid November with the risk of penalties for non-compliance that can reach up to 10% of global annual turnover (or 20% for repeat offenses).
Synapse’s collapse has frozen nearly $160M from fintech users — here’s how it happened
The collapse and bankruptcy of BaaS fintech Synapse has revealed how treacherous things are for the often-interdependent fintech world when one key player hits trouble.
Synapse operated a service that allowed others (mainly fintechs) to embed banking services into their offerings. For instance, a software provider that specialized in payroll for 1099 contractor-heavy businesses used Synapse to provide an instant payment feature; others used it to offer specialized credit/debit cards.
The San Francisco-based startup raised a total of just over $50 million in venture capital in its lifetime, including a 2019 $33 million Series B raise led by Andreessen Horowitz’s Angela Strange. Synapse wobbled in 2023 with layoffs and filed for Chapter 11 in April of this year, hoping to sell its assets in a $9.7 million fire sale to another fintech, TabaPay. But TabaPay walked.
The result was that Synapse has been urged to liquidate entirely under Chapter 7 and a lot of other fintechs such as Juno, Yotta and Yieldstreet — and their customers — are paying the price for Synapse’s demise.
The debacle has left observers questioning the banking-as-a-service concept and digital banking as a whole, considering that millions of consumers with nearly $160 million in deposits remain unable to access their funds.
Here is a timeline of Synapse’s troubles and the ongoing impact it is having on banking consumers.
2024
Founder raises $11 million for a new startup
August 22: Sankaet Pathak is full steam ahead on Foundation, his new robotics startup. On X, Pathak said that Foundation’s goal is to “automate GDP through AI and Robotics to free people from labor jobs, allowing them to pursue their passions.” He also on August 20 posted on X that Synapse’s former partner Evolve Bank “needs to start paying out customers and cover the deficit they created.”
Nearly $160 million in funds still frozen
July 7: Fintech Business Weekly reports that a recent “status conference in the ongoing Synapse bankruptcy didn’t offer much hope to end users whose funds were still frozen, with efforts to reconcile and release the remaining funds, approximately $158.6 million, appearing to slow.” This means that about $158.6 million was still owed to end users. However, there was an estimated $65 million to $95 million in funds that were missing.
Senators urge Synapse and its partners and backers to restore customers’ access to their money
July 1: A group of senators banded together to urge Synapse’s owners and bank and fintech partners to “immediately restore customers’ access to their money.” As part of their demands, the senators implicated both the partners and the venture investors of the company as being responsible for missing customer funds.
Synapse CEO moves on to starting another company
June 12: Synapse’s CEO Sankaet Pathak has reportedly already raised $10 million for a new robotics startup even while questions remained on the whereabouts of $85 million in Synapse’s customer savings.
Fallout continues, more fintechs and millions of consumers affected
May 25: Based on Synapse’s filings, as many as 100 fintechs and 10 million end customers were potentially impacted by the company’s collapse by the end of May. For instance, funds at crypto app Juno and banking platform Yotta were also impacted by Synapse’s collapse. Meanwhile, Mainvest, a fintech lender to restaurant businesses, said it was actually shutting down as a result.
U.S. trustee pushes for Chapter 7
May 16: A United States trustee filed an emergency motion to convert Synapse’s debt reorganization Chapter 11 bankruptcy into a liquidation Chapter 7. The trustee said that Synapse had “grossly” mismanaged its estate so that losses were continuing with little “reasonable likelihood of reorganization” that would allow the company to emerge on the other side and carry on.
Customer teen banking startup Copper discontinues its banking operations
May 13: Synapse customer teen banking startup Copper had to abruptly discontinue its banking deposit accounts and debit cards as a result of Synapse’s difficulties. That left an unknown number of consumers, mostly families, without access to the funds they had trustingly deposited into Copper’s accounts.
Sale of assets called off
May 9: TabaPay said it had abandoned its plans to purchase Synapse’s assets. There was lots of finger-pointing when that deal dissolved. Synapse’s CEO made accusations that the problem was banking partner Evolve Bank & Trust. And Evolve denied those charges, saying it was not involved, and not to blame. Meanwhile, another player in the saga, Mercury, said Synapse’s allegations had “no merit.”
Synapse files for Chapter 11 bankruptcy, assets to be sold off for $9.7 million
April 22: Synapse filed for Chapter 11 bankruptcy and said at that time that its assets would be acquired by instant payments company TabaPay, pending bankruptcy court approval. (Again, TabaPay would walk away from the deal a couple weeks later.)
2023
Synapse lays off staff, reports of tension with partner Evolve Bank arise
October 13: Evolve Bank & Trust and startup digital bank Mercury ended their respective relationships with Synapse and work directly with each other. Evolve and Synapse addressed the brouhaha here.
October 6: Synapse confirmed that it had laid off 86 people, or about 40% of the company. That was just four months after the company had let go of 18% of its workforce as “the current macroeconomic conditions” had begun to impact its clients and platforms, affecting its anticipated growth. In 2019, TechCrunch reported on the company’s $33 million Series B raise led by Andreessen Horowitz after rebranding from SynapseFi.
Note: This article was updated post-publication to clarify that Synapse has not yet converted to Chapter 7.
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Spain's antitrust watchdog fines Booking.com nearly $450M for unfair terms and restricting rivals
Spain’s competition authority, the CNMC, has found that online travel agency Booking.com abused a dominant market position over the past five years. It fined the company €413.24 million (or around $447 million at current exchange rates) on Tuesday.
The CNMC opened an investigation of Booking.com back in October 2022, following complaints by the Spanish Association of Hotel Managers and the Regional Hotel Association of Madrid. The watchdog’s probe confirmed that Booking imposed unfair terms and conditions on hotels that the authority said made it difficult for rival travel agencies to compete.
Booking.com held a share of between 70% and 90% of the market in Spain for provision of online booking intermediation services to hotels by online travel agencies over the period in question.
“The company has committed two abuses of its dominant position since at least January 1, 2019 until today by imposing various unfair commercial conditions on hotels located in Spain that use its booking intermediation services and restricting competition from other online travel agencies… that offer the same services,” the CNMC wrote in a press release [in Spanish; this is a machine translation].
The authority concluded that Booking imposed an unfair price clause on hotels using its platform that prevented them from offering their rooms on their own websites for less than the price offered on Booking.com, even as the platform reserved the right to unilaterally reduce the price hotels offer through its website or application.
The CNMC also found fault with issues related to clauses pertaining to the company’s general terms, stating that only an English version of the terms had legal value whereas both the law applicable to the terms, and the competent courts, are of the Netherlands, where Booking is headquartered. This made it more expensive than it should be for Spanish entities to take Booking to court in the event of a dispute.
Additionally, the investigation findings call out a lack of transparency around the value Booking provided hotels via a series of subscription products that allow hotels to improve their position in the platform’s default rankings in exchange for paying higher commission fees or offering some of their rooms at discounted rates.
The CNMC said Booking was able to abuse its dominant position by restricting competition from other online travel agencies by using the total number of reservations for a hotel through its platform as a ranking criterion in the default search results lists, thereby encouraging hotels to concentrate their online bookings on Booking.com.
The authority’s findings also highlight the use of a performance requirement by Booking that it used as a criterion for hotels accessing and remaining in two of the aforementioned subscription programs — but which it found to be based “primarily on the profitability of each hotel for Booking.com.”
“This encourages hotels that want to access or remain in the programs to follow a pricing and availability policy that leads them to concentrate their sales on the platform, to the detriment of other competing agencies,” the CNMC added.
The sanction imposed by the Spanish authority breaks down into two penalties of €206.62M apiece for each of the abuses of a dominant position. The first is the unfair T&Cs imposed on hotels in Spain, and the second being the restriction of competition from other online travel agencies.
The authority has also imposed behavioral obligations on Booking, which require it to stop the infringing conduct and ensure it does not engage in any other similar conduct that could product an equivalent effect in the future.
Booking.com has been contacted for a response to the CNMC’s sanction. The company may appeal the sanction before the National Court but must do so within two months.
Beyond Spain, the European travel giant is facing tighter regulation across the EU in the coming months, following its designation as a gatekeeper under the bloc’s Digital Markets Act back in May. It will be expected to be compliant with that regime by mid November with the risk of penalties for non-compliance that can reach up to 10% of global annual turnover (or 20% for repeat offenses).
Synapse’s collapse has frozen nearly $160M from fintech users — here’s how it happened
The collapse and bankruptcy of BaaS fintech Synapse has revealed how treacherous things are for the often-interdependent fintech world when one key player hits trouble.
Synapse operated a service that allowed others (mainly fintechs) to embed banking services into their offerings. For instance, a software provider that specialized in payroll for 1099 contractor-heavy businesses used Synapse to provide an instant payment feature; others used it to offer specialized credit/debit cards.
The San Francisco-based startup raised a total of just over $50 million in venture capital in its lifetime, including a 2019 $33 million Series B raise led by Andreessen Horowitz’s Angela Strange. Synapse wobbled in 2023 with layoffs and filed for Chapter 11 in April of this year, hoping to sell its assets in a $9.7 million fire sale to another fintech, TabaPay. But TabaPay walked.
The result was that Synapse has been urged to liquidate entirely under Chapter 7 and a lot of other fintechs such as Juno, Yotta and Yieldstreet — and their customers — are paying the price for Synapse’s demise.
The debacle has left observers questioning the banking-as-a-service concept and digital banking as a whole, considering that millions of consumers with nearly $160 million in deposits remain unable to access their funds.
Here is a timeline of Synapse’s troubles and the ongoing impact it is having on banking consumers.
2024
Nearly $160 million in funds still frozen
July 7: Fintech Business Weekly reports that a recent “status conference in the ongoing Synapse bankruptcy didn’t offer much hope to end users whose funds were still frozen, with efforts to reconcile and release the remaining funds, approximately $158.6 million, appearing to slow.” This means that about $158.6 million was still owed to end users. However, there was an estimated $65 million to $95 million in funds that were missing.
Senators urge Synapse and its partners and backers to restore customers’ access to their money
July 1: A group of senators banded together to urge Synapse’s owners and bank and fintech partners to “immediately restore customers’ access to their money.” As part of their demands, the senators implicated both the partners and the venture investors of the company as being responsible for missing customer funds.
Synapse CEO moves on to starting another company
June 12: Synapse’s CEO Sankaet Pathak has reportedly already raised $10 million for a new robotics startup even while questions remained on the whereabouts of $85 million in Synapse’s customer savings.
Fallout continues, more fintechs and millions of consumers affected
May 25: Based on Synapse’s filings, as many as 100 fintechs and 10 million end customers were potentially impacted by the company’s collapse by the end of May. For instance, funds at crypto app Juno and banking platform Yotta were also impacted by Synapse’s collapse. Meanwhile, Mainvest, a fintech lender to restaurant businesses, said it was actually shutting down as a result.
U.S. Trustee pushes for Chapter 7
May 16: A United States trustee filed an emergency motion to convert Synapse’s debt reorganization Chapter 11 bankruptcy into a liquidation Chapter 7. The trustee said that Synapse had “grossly” mismanaged its estate so that losses were continuing with little “reasonable likelihood of reorganization” that would allow the company to emerge on the other side and carry on.
Customer teen banking startup Copper discontinues its banking operations
May 13: Synapse customer teen banking startup Copper had to abruptly discontinue its banking deposit accounts and debit cards as a result of Synapse’s difficulties. That left an unknown number of consumers, mostly families, without access to the funds they had trustingly deposited into Copper’s accounts.
Sale of assets called off
May 9: TabaPay said it had abandoned its plans to purchase Synapse’s assets. There was lots of finger-pointing when that deal dissolved. Synapse’s CEO made accusations that the problem was banking partner Evolve Bank & Trust. And Evolve denied those charges, saying it was not involved, and not to blame. Meanwhile, another player in the saga, Mercury, said Synapse’s allegations had “no merit.”
Synapse files for Chapter 11 bankruptcy, assets to be sold off for $9.7 million
April 22: Synapse filed for Chapter 11 bankruptcy and said at that time that its assets would be acquired by instant payments company TabaPay, pending bankruptcy court approval. (Again, TabaPay would walk away from the deal a couple weeks later.)
2023
Synapse lays off staff, reports of tension with partner Evolve Bank arise
October 13: Evolve Bank & Trust and startup digital bank Mercury ended their respective relationships with Synapse and work directly with each other. Evolve and Synapse addressed the brouhaha here.
October 6: Synapse confirmed that it had laid off 86 people, or about 40% of the company. That was just four months after the company had let go of 18% of its workforce as “the current macroeconomic conditions” had begun to impact its clients and platforms, affecting its anticipated growth. In 2019, TechCrunch reported on the company’s $33 million Series B raise led by Andreessen Horowitz after rebranding from SynapseFi.
Note: This article was updated post-publication to clarify that Synapse has not yet converted to Chapter 7.
Want more fintech news in your inbox? Sign up for TechCrunch Fintech here.
Want to reach out with a tip? Email me at [email protected] or send me a message on Signal at 408.204.3036. You can also send a note to the whole TechCrunch crew at [email protected]. For more secure communications, click here to contact us, which includes SecureDrop (instructions here) and links to encrypted messaging apps.