Amazon abandons acquisition of iRobot

Amazon and iRobot have jointly declared the termination of their proposed merger due to significant opposition from antitrust regulators in the European Union and the United States.

Amazon stated that its planned $1.4 billion acquisition of iRobot faced insurmountable hurdles in obtaining regulatory approval within the European Union.

On Monday, Margrethe Vestager, the EU’s antitrust chief, announced that Amazon’s acquisition of iRobot would have allowed Amazon to limit or degrade the access of iRobot’s competitors to Amazon stores.

According to Vestager, Amazon could have taken actions such as delisting rival robot vacuum cleaners, reducing the visibility of rivals, or raising the costs of iRobot’s competitors to advertise and sell their robot vacuum cleaners on the Amazon marketplace.

iRobot revealed a substantial restructuring initiative aimed at cost reduction, involving a workforce reduction of approximately 31%, equivalent to 350 jobs. Additionally, the company announced the departure of founder Colin Angle from the role of CEO at the helm of the Roomba robot vacuum manufacturer.

Angle said that given the current challenges, he and the board “mutually decided that iRobot will be better served by a new leader with turnaround experience.”

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” said David Zapolsky, Amazon’s general counsel. “We’re believers in the future of consumer robotics in the home and have always been fans of iRobot’s products,” he added in a statement.

Also Read: U.S. antitrust inquiry targets AI partnerships

Earlier this month, European Commission antitrust regulators expressed concerns that Amazon’s acquisition of iRobot could allow it to unfairly compete with iRobot rivals on its online marketplace in France, Germany, Italy, and Spain.

Amazon, iRobot announce the end of their merger. @Reuters reported the deal would be blocked by European Commission antitrust regulators over concerns about the impact it would have on iRobot’s rivals selling products on Amazon’s online marketplace https://t.co/tZWtUs6AoR pic.twitter.com/2Zhju3DSXW

— Reuters (@Reuters) January 30, 2024

The Federal Trade Commission was about to reject Amazon’s deal before the companies abandoned it. Last week, the FTC staff had a meeting with Amazon to inform them about their plan to recommend a commission vote to sue and block the acquisition. A source added that the commission would hold a final meeting with Amazon on Monday before voting to approve a legal challenge to the merger.

Amazon announced its plans to expand its smart home devices and virtual healthcare services through the acquisition of several companies, including Alexa and Ring, in August 2022.

Amazon has had some ups and downs with competition regulators lately. On the one hand, it completed deals for healthcare provider One Medical and MGM’s movie library. On the other hand, it’s currently facing a lengthy court battle with the FTC in a Seattle federal court.

The accusations are that Amazon uses illegal strategies to increase profits on its online retail platform. One such strategy is an algorithm that allegedly raised prices by more than $1 billion. Critics criticised the deal for strengthening Amazon’s position in smart home devices.