AMAZON SCRAPS PLAN TO ACQUIRE MAKER OF ROOMBA
Online retail giant says EU regulatory hurdles too great to buy iRobot
Amazon said Monday that it was abandoning plans to buy iRobot, the maker of the self-driving Roomba vacuum, after regulators raised concerns that the deal would hurt competition.
The announcement is a rare admission of defeat by Amazon, which has in recent years acquired an eclectic mix of companies such as Whole Foods and MGM Studios, and is a sign of how the world’s largest tech companies are being forced to adjust their business practices, products and policies as a result of stiffening regulatory scrutiny globally, particularly in the European Union.
In November, EU antitrust regulators warned Amazon that they might try to block the deal because it could restrict competition in the market for robot vacuum cleaners. Officials at the Federal Trade Commission met last week with Amazon’s lawyers and told them that they planned to recommend the agency file a lawsuit to challenge the deal, according to a person familiar with the conversations. The companies said the decision to end the deal was mutual.
Amazon was scheduled to have meetings this week where it could make a last attempt to press its case with the commission, the person said.
Amazon, which will pay
a $94 million termination fee, said in a statement that “disproportionate regulatory hurdles” caused it to step away from the deal, which was announced in 2022. IRobot’s products, which also include robotic mops and air purifiers, were to join a growing list of connected home products made by Amazon, including Ring home security systems and Echo smart speakers.
The online retailer said that rather than restrict competition, the deal would have given iRobot more resources to compete with other robotics companies.
“This outcome will deny con
sumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable,” David Zapolsky, Amazon senior vice president and general counsel, said in the statement.
Margrethe Vestager, the European Union’s top antitrust regulator, said in a statement that the deal would have given Amazon the ability to undercut rivals in the vacuum and “smart home” market by restricting or degrading their access to Amazon’s online store.
“We looked closely at the dual role of Amazon as platform opiRobot erator and market participant, and the implications of Amazon merging with the owner of a very successful product for which Amazon is already an important sales channel,” she said. She added that the EU had been in “close contact” with the FTC during the investigation.
Amazon announced the deal to buy iRobot in August 2022, and just a few months later the company undertook a series of large layoffs. Its devices group was particularly hard hit. In the summer, Dave Limp, its longtime devices chief, left the company after more than 13 years. He was replaced by Panos Panay, a consumer electronics executive from Microsoft.
Amazon is not the only company facing hurdles in completing acquisitions. In December, Adobe, the maker of Photoshop and Illustrator, scrapped a $20 billion takeover of Figma, a maker of design collaboration tools, after it was questioned by regulators in the United States, the European Union and Britain.
In the European Union, oversight of the tech sector is expected to intensify in the coming months as a new law, the Digital Markets Act, takes full effect with the aim of increasing competition in the digital economy. Last week, Apple announced a slew of changes to comply with the law, including allowing customers to use alternatives to the App Store for the first time. In the United States, regulators have filed antitrust lawsuits against tech companies, including an FTC complaint arguing that Amazon squeezed small merchants and artificially raised prices for consumers.