At this time, Amazon terminated its deliberate acquisition of iRobot, producer of Roomba robotic vacuums, as the businesses noticed “no path to regulatory approval.” iRobot then announced that it might be reducing practically one-third of its work drive.
Whereas the businesses blamed regulators within the European Union for the termination, meddlesome U.S. lawmakers performed their very own half in souring the deal.
In August 2022, Amazon announced its intent to purchase iRobot for $1.7 billion. The acquisition would complement Amazon’s rising steady of sensible dwelling merchandise, like Echo Hub management panels and Ring video doorbells.
The next month, the Federal Commerce Fee (FTC) began an investigation of the merger, and lawmakers weighed in quickly after. In a letter to FTC Chair Lina Khan, Sen. Elizabeth Warren (D–Mass.) and 5 Democratic representatives beneficial that “the FTC ought to use its authority to oppose the Amazon–iRobot transaction” because the acquisition “may hurt shoppers and scale back competitors and innovation within the dwelling robotics market.”
The letter referenced a Bloomberg article in regards to the proposed merger, which famous that “iRobot’s Roomba dominates the sensible vacuum market with a 75% market share by income within the US.” The lawmakers cited the FTC’s antitrust authority and “Amazon’s historical past of anticompetitive practices” as causes the company ought to oppose the merger.
In November 2023, the European Fee issued a Assertion of Objections along side its personal assessment. The fee anxious the deal “could prohibit competitors out there for robotic vacuum cleaners.” It famous that “as a result of Amazon’s on-line market is a very essential channel” for promoting robotic vacuums, Amazon “could have the flexibility and the inducement to foreclose iRobot’s rivals” both by excluding them from its market or by “degrading their entry to it.”
Notably, the UK—which is now not a part of the European Union—approved the merger in June 2023. On the time, the nation’s Competitors and Markets Authority “concluded that the deal wouldn’t result in competitors considerations within the UK.”
Earlier this month, Politico reported that Amazon had till January 10 to supply concessions that will tackle the European Fee’s considerations; Amazon let the deadline lapse with out providing any concessions.
At this time, the businesses jointly announced the termination of the acquisition deal, seeing “no path to regulatory approval within the European Union.” Quickly after, iRobot announced “an operational restructuring plan,” by which it might lay off 350 workers—31 % of its work drive. Co-founder and CEO Colin Angle, who was anticipated to stay in cost underneath the phrases of the merger, would step down.
Whereas Europe’s considerations could have been what soured the deal, it appears the U.S. lawmakers who requested the FTC to oppose the deal additionally acquired their want.
However the complaints from the E.U. and lawmakers like Elizabeth Warren are overblown. Buying iRobot wouldn’t have denied shoppers the flexibility to buy robotic vacuums: Whereas Roomba will be the best-selling, firms like Shark and Eufy make their very own aggressive variations, together with at lower prices than a Roomba. In its list of the best robot vacuums of 2024, Wirecutter beneficial no iRobot merchandise, citing poor efficiency when in comparison with opponents.
In the meantime, as the businesses waited on regulators, iRobot was dropping cash: The corporate took out a $200 million bridge loan in July 2023 to tie it over till the deal closed (at which level Amazon lowered its offer to account for the brand new debt). With the deal scuttled, Amazon will now pay a $94 million termination payment, however iRobot expects to report an working lack of as a lot as $285 million for 2023.
It is price questioning, then, if that is what lawmakers like Warren had in thoughts. The FTC letter anxious the merger “may hurt shoppers and scale back competitors and innovation within the dwelling robotics market.” However with out the merger, iRobot may very properly face insolvency, and practically one-third of its work drive will lose their jobs—and contemplating the corporate is based in Massachusetts, a considerable variety of them could very properly be Warren’s constituents.
