Amazon scraps deal to buy Roomba maker amid regulatory scrutiny
Amazon said Monday it was canceling its plans to buy iRobot, the maker of the self-driving Roomba vacuum cleaner, after regulators expressed concerns that the deal would hurt competition.
The announcement is a rare admission of defeat by Amazon, which has acquired an eclectic mix of companies like Whole Foods and MGM Studios in recent years, and is a sign of how the world's largest tech companies are being forced to adjust their business practices, products and services to fit. policy as a result of stricter regulatory scrutiny worldwide, especially in the European Union.
In November, EU antitrust regulators warned Amazon that they could try to block the deal because it could limit competition in the robot vacuum cleaner market. The Federal Trade Commission also kept the deal under scrutiny.
Amazon, which will pay iRobot a $94 million termination fee, said in a statement that “disproportionate regulatory hurdles” caused it to walk away from the deal, which was first announced in 2022. IRobot's products, which include robot jokes and air purifiers would join a growing list of connected home products from Amazon, including Ring home security systems and Echo smart speakers.
Amazon said the deal would have given iRobot more resources to compete with other robotics companies, rather than limiting competition.
“This outcome will deny consumers faster innovation and more competitive pricing, which we are confident would have made their lives easier and more enjoyable,” David Zapolsky, Amazon's senior vice president and general counsel, said in the statement.
Amazon isn't the only company facing hurdles 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, scrutiny of the technology sector is expected to intensify in the coming months as a new law, the Digital Markets Act, comes into full effect aimed at increasing competition in the digital economy. Last week, Apple announced a slew of changes to comply with the law, including allowing customers to use alternatives to the App Store for the first time.
IRobot, a publicly traded company struggling with declining sales and mounting losses, must regroup without the financial support of Amazon. The company's share price has fallen more than 60 percent in the past month as the fate of the Amazon deal was called into question.
On Monday, iRobot said it would cut about 350 jobs, or about 30 percent of the workforce, and reshuffle management positions.
“The termination of the agreement with Amazon is disappointing, but iRobot is now looking to the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations,” said Colin Angle, the company's founder steps down as CEO. in a statement.
Glen Weinstein, executive vice president and chief legal officer of iRobot, was named interim CEO.