EU's Competition Authority Intends to Block Amazon's Purchase of iRobot, According to The Wall Street Journal's Report.
In a significant move, the European Union's competition watchdog has decided to reject Amazon's proposed acquisition of iRobot, the robot vacuum maker. The decision, which was due by February 14, was prompted by concerns over the potential implications for competition in the burgeoning smart home technology market.
The rejection stems from Amazon's failure to provide remedies by the January 10 deadline. Following a meeting with European Commission officials, the tech giant was informed that the deal faced likely rejection due to the potential to restrict competition in the robot vacuum cleaner market and give Amazon an incentive to foreclose competitors.
Amazon had announced its intention to acquire iRobot in August 2022, seeking to expand its range of smart devices, including the Alexa voice assistant, smart thermostats, security devices, and wall-mounted smart displays. However, the regulatory concerns raised serious antitrust issues, as the acquisition was seen as having the potential to harm consumers by reducing competition and innovation.
In response to these concerns, Amazon and iRobot mutually agreed to terminate the acquisition in January 2024. The European Commission’s opposition was a decisive factor leading to the deal’s cancellation. The termination has had significant impacts on iRobot, with a CEO stepping down and a workforce reduction by about 31%.
Matt Schruers, president of the Computer and Communications Industry Association, criticized the potential rejection of Amazon's acquisition of iRobot. He argued that blocking the deal makes no sense if the objective is to have more competition in the home robotics sector. Schruers emphasized the importance of regulators acknowledging the potential impact of the rejection on consumer options, suggesting that it could limit consumer options in the home robotics sector.
The proposed acquisition was worth $1.4 billion. The rejection could have financial implications for both Amazon and iRobot, with iRobot experiencing a nearly 40% drop in shares, closing at $14.3, as a result of the reported rejection.
The European Commission's decision on the acquisition could set a precedent for future tech acquisitions within the EU. It underscores the EU's strict stance on preventing consolidation that could harm market competition, particularly against dominant tech companies like Amazon.
The European Commission's decision to reject Amazon's acquisition of iRobot, due to competition concerns in the smart home technology market, could have significant financial implications for both companies.7 Matt Schruers, president of the Computer and Communications Industry Association, argued that blocking the deal may limit consumer options in the home robotics sector, emphasizing the importance of regulators considering the potential impact of their decisions on innovation and consumer choice.
