Amazon Cancels Acquisition Of iRobot (Photo by Rubaitul Azad on Unsplash)
Amazon and global consumer robot company iRobot announced that they have entered into a mutual agreement to cancel their previously announced acquisition agreement. Amazon has abandoned this significant deal following disagreements with European Union regulators, who warned of blocking the deal.
The acquisition, worth $1.4 billion, was announced in August 2022. However, the proposed deal has since come under regulatory scrutiny. In July 2023, the European Commission opened an in-depth investigation to assess the proposed acquisition. The commission stated that it is concerned that the transaction would permit Amazon to restrict competition in the market for robot vacuum cleaners (‘RVCs”) and to strengthen its position as an online marketplace provider. In November 2023, the commission informed Amazon of its preliminary view that its proposed acquisition may restrict competition in the market for robot vacuum cleaners.
The Commission said earlier that they have conducted a wide-ranging investigation and found that Amazon may have the ability and the incentive to foreclose iRobot”s rivals by engaging in several foreclosing strategies. In a statement, the commission also said that such foreclosure strategies could restrict competition in the market for RVCs, leading to higher prices, lower quality, and less innovation for consumers.
Notably, Amazon and iRobot have not mentioned the pressure from the European Union specifically. “Amazon’s proposed acquisition of iRobot has no path to regulatory approval in the European Union,” said Amazon in its statement. David Zapolsky, Amazon SVP and General Counsel, said that this will deny consumers faster innovation and more competitive prices. It is worth mentioning that both companies have signed a termination agreement.
Following this, iRobot Corporation announced a comprehensive operational restructuring plan. The company said that approximately 350 iRobot employees, which represents about 31 percent of the total workforce, will be laid off. iRobot also said that Colin Angle has stepped down as CEO of the Roomba robot vacuum manufacturer, and Glen Weinstein has been appointed interim CEO.
