Concerns over stifled competition, Alexa tie-ins reportedly sink deal in Europe.
Amazon will no longer pursue a $1.4 billion acquisition of iRobot, maker of Roomba robot vacuums after the companies announced today that they have “no path to regulatory approval in the European Union.”
On the same day, iRobot announced an “operational restructuring plan” in which 350 employees, or 31 percent of iRobot’s workforce, will be laid off. CEO Colin Angle, one of the company’s cofounders, will also step down, and the company has hired a chief restructuring officer for its “return to profitability.” The company will refocus on its core cleaning product lineup, pausing efforts in air purification, robotic lawn mowing, and education.
As part of the deal’s terms, Amazon will pay $94 million to iRobot, most of it earmarked for paying back a three-year, $200 million loan the company took out when the Amazon acquisition was announced in August 2022. iRobot stated in its release that it expected to report losses of “between $265 and $285 million” in the fourth quarter of 2023.
Amazon’s proposed acquisition of iRobot drew concern and criticism from privacy and antitrust advocates and regulators almost immediately after it hit the news. iRobot and Amazon agreed to share data with the Federal Trade Commission after the FTC began a review into how the deal might bolster Amazon’s market for connected devices and retail generally. There was also concern about potential new uses for the household maps generated by robot vacuums like the Roomba, according to Politico.Advertisement
iRobot, for its part, claimed in a Securities and Exchange Commission filing that joining Amazon would give it an “inventive, customer-centric, long-term oriented culture where entrepreneurs thrive,” as well as access to “Amazon’s resources and technology.”
It became clear earlier this month that European Union regulators were likely to reject the deal after European Commission (EC) competition (i.e., antitrust) officials expressed concerns that Amazon could limit the availability of Roomba rivals on its retail store, according to The Wall Street Journal. EC officials were also concerned about Amazon using labels like “Works with Alexa” or “Amazon’s Choice” with iRobot products.
The Computer & Communications Industry Association (CCIA) lobbying group responded to European regulators in a release last month. “If the objective is to have more competition in the home robotics sector, this makes no sense,” CCIA President Matt Schruers said in the release. “There is no plausible risk to competition from a US retailer acquiring a struggling US vacuum maker in a sector overtaken by dynamic Chinese manufacturers. Blocking this deal may well leave consumers with fewer options, and regulators cannot sweep that fact under the rug.”
Amazon’s Alexa-centered connected home ambitions may have diminished since its initial iRobot interest. The Alexa division was reported to have lost as much as $10 billion in 2022, and its devices division has absorbed a notable share of the company’s recent layoffs.
Representatives for both Amazon and iRobot declined to comment beyond their official press releases regarding the deal and restructuring.
This post was updated at 1:25 p.m. Eastern on Jan. 29 to note responses from Amazon and iRobot, and adding a link to CEO and co-founder of iRobot Colin Angle’s LinkedIn post.
