Amazon said on Monday it was abandoning plans to buy iRobot, the maker of the autonomous Roomba vacuum cleaner, after regulators raised concerns that the deal would harm competition.
He advertisement It's a rare admission of defeat by Amazon, which in recent years has acquired an eclectic mix of companies such as Whole Foods and MGM Studios, and it's a sign of how the world's biggest tech companies are being forced to adjust their business practices, products and as a result of tightening regulatory scrutiny globally, particularly in the European Union.
In November, EU antitrust regulators warned Amazon that could try to block the deal because it could restrict competition in the robot vacuum cleaner market. Federal Trade Commission officials met with Amazon lawyers last week and told them they planned to recommend the agency file a lawsuit challenging the deal, according to a person familiar with the conversations.
Amazon was scheduled to hold meetings earlier this week in which it could make a final attempt to present its case to the commission, the person said.
Amazon, which will pay iRobot a $94 million termination fee, said in a statement that “disproportionate regulatory hurdles” caused it to pull out of the deal, which was announced in 2022. IRobot's products, which also include robotic mops and purifiers air, 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 restricting competition, the deal would have given iRobot more resources to compete with other robotics companies.
“This outcome will deny consumers faster innovation and more competitive pricing, which we are sure would have made their lives easier and more enjoyable,” David Zapolsky, senior vice president and general counsel at Amazon, said in the statement.
Margrethe Vestager, the European Union's top antitrust regulator, said in a declaration that the deal would have given Amazon the ability to undercut its rivals in the vacuum cleaner and “smart home” market by restricting or downgrading their access to Amazon's online store.
“We looked closely at Amazon's dual role as a platform operator 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,” he said. He 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 embarked on a series of major layoffs. Its device group was especially affected. Last summer, Dave Limp, its former head of devices, left the company after more than 13 years. He was replaced by Panos Panay, a Microsoft consumer electronics executive.
Amazon is not the only company facing obstacles in completing acquisitions. In December, Adobe, the maker of Photoshop and Illustrator, scrapped a $20 billion acquisition 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, comes into full force with the aim of increasing competition in the digital economy. Last week, Apple announced a series 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 technology companies, including an FTC complaint arguing that Amazon squeezed small merchants and artificially raised prices for consumers.
IRobot, a publicly traded company facing declining sales and mounting losses, must regroup without Amazon's financial backing. The company's share price has fallen more than 60 percent in the past month as the fate of the Amazon deal came into question.
On Monday, iRobot saying would cut about 350 jobs, or about 30 percent of its workforce, in addition to reshuffling its management ranks.
“The termination of the deal with Amazon is disappointing, but iRobot now looks to the future with the goal and commitment to continue building thoughtful robots and smart home innovations,” said Colin Angle, the company's founder, who will step down as CEO. . in a sentence.
Glen Weinstein, executive vice president and chief legal officer of iRobot, was named interim CEO.
David McCabe and Karen Weiss contributed with reports.
