June 15, 2024

Amazon Drops $1.7 Billion Bid to Buy Roomba Maker iRobot After Regulatory Scrutiny

Written by AiBot

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Jan 30, 2024

E-commerce giant Amazon has scrapped its $1.7 billion agreement to purchase iRobot, maker of the popular robotic Roomba vacuum cleaners. The deal collapsed after facing antitrust scrutiny in the U.S. and Europe over concerns about Amazon’s growing market power.

EU Threatens to Block Deal Over Competition Worries

The termination comes just months after Amazon announced plans in August 2022 to acquire the Bedford, Massachusetts-based maker of robotic vacuum cleaners.

However, the acquisition quickly drew regulatory backlash in Europe, with EU antitrust regulators signaling in late 2022 they would likely block the deal over competition concerns.

Margrethe Vestager, the European Commissioner for Competition stated in December the deal would have allowed Amazon to accumulate very large amounts of data from users’ homes, further strengthening its position in the markets for smart home devices and online retail.

“Our preliminary investigation shows that this deal risks significantly reducing competition in the markets for smart robots and also online retail services,” Vestager said.

The EU was reportedly preparing to issue a formal objections letter, which made it highly likely the deal would be blocked. Rather than face a veto, Amazon opted to walk away entirely.

FTC Also Planned to Challenge Deal in U.S.

Scrutiny was not limited to Europe either – the U.S. Federal Trade Commission had also privately told both companies in January that it intended to file an antitrust lawsuit to block Amazon’s proposed acquisition of iRobot.

“We determined that the deal was unlikely to win approval from either U.S. or EU antitrust enforcers and so decided mutually with iRobot to abandon the transaction,” an Amazon spokesperson said.

Critics of large technology companies, including Senator Elizabeth Warren and FTC Chair Lina Khan, warned the agreement should not go ahead due to the potential impact on consumer privacy and competition.

The collapse of the deal marks one of the most prominent failures yet for Amazon as it looks to expand its smart home device ecosystem.

Immediate Fallout – iRobot to Lay Off 10% of Staff

For iRobot, the failed acquisition has had severe consequences. The same day Amazon pulled out, iRobot announced it is laying off approximately 10% of its workforce, or around 140 employees globally.

iRobot said the restructuring aims to focus investments on its core robotic floor care products. The company also stated:

“We continue to have confidence in our strategy and believe significant opportunities exist to leverage our investments to grow share in robotic floor care.”

The company’s long-time CEO, Colin Angle, has also stepped down to be replaced by current CFO Julie Zeiler in the interim.

Key Impacts of Failed Amazon-iRobot Deal
Amazon abandons $1.7 billion bid to acquire iRobot
EU competition regulators threaten to block deal
iRobot announces laying off 10% of global workforce (140 employees)
iRobot CEO Colin Angle steps down, replaced by CFO in interim

Zeiler said these “have been difficult decisions, but I believe essential for structuring our operations to support our growth strategy.”

Shares in iRobot plummeted 43% immediately when news broke about Amazon withdrawing its offer to buy the firm. Analysts had widely expected Amazon’s acquisition to be approved before the regulatory roadblocks emerged.

What’s Next for iRobot and Amazon

The outlook now appears challenging for pioneering consumer robot maker iRobot without ownership by one of the “Big Tech” giants.

As the inventor of robotic vacuum cleaners, iRobot has dominated the industry it created with a 75% market share. However, the company has faced growing competition from Chinese brands offering cheaper alternative robot vacuums in recent years.

Losing the financial backing and data capabilities of Amazon while facing headwinds in its core business may hamper iRobot’s expansion plans into additional consumer robotics like lawn mowing machines.

For Amazon, this failed acquisition continues the company’s struggles to expand its presence in the smart home device market beyond Alexa voice assistants. Back in 2018, Amazon acquired smart doorbell maker Ring for $1 billion and had looked to make a similar strategic purchase with iRobot.

The collapsed deal also demonstrates the increased scrutiny Amazon faces from regulators worldwide when attempting major acquisitions. Last month, Amazon closed its purchase of movie studio MGM after prolonged reviews. But buying a household brand like iRobot proved a deal too far.

With Amazon likely deterred from buying any major companies for some time, it may need to refocus energy on developing its own smart home gadgets to compete with Google Nest and Apple HomeKit products.

The saga between Amazon and iRobot highlights the rapidly evolving landscape for Big Tech mergers and competition issues that companies must navigate.

Expert Reaction

Industry analysts and antitrust experts have weighed in on Amazon’s decision to abandon plans to acquire iRobot:

“This deal would have given Amazon yet more smart home data while allowing it to torpedo a competitor. The EU was right to stand in its way,” said Sarah Miller, Executive Director of the American Economic Liberties Project.

“It was unlikely U.S. regulators were going to allow this deal to move forward. This will force Amazon back to the drawing board as it aims to expand its reach into consumers’ lives,” said Dan Ives, Wedbush Securities analyst.

“The collapse of Amazon’s bid for iRobot shows regulators on both sides of the Atlantic are taking coordinated action to address harmful consolidation in the tech sector,” said Alex Harman, Competition Policy Advocate at Public Citizen.

While this saga dealt a major blow to iRobot’s fortunes and leadership, Amazon’s expansion ambitions have only been temporarily thwarted. Consumers can likely expect both companies to continue competing fiercely in the smart home devices space.




AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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