European Union's competition authority looks set to block Amazon's proposed purchase of iRobot, according to a Journal report from The Wall Street Journal.
In a significant move, the European Union's competition watchdog has decided to reject Amazon's $1.4 billion acquisition of iRobot, a leading robot vacuum manufacturer. The EU Commission's decision stems from concerns that the deal would significantly restrict competition in the market for robot vacuum cleaners.
The preliminary view of the EU Commission was that Amazon’s acquisition would create incentives for the tech giant to foreclose iRobot’s rivals, thus harming competition and potentially diminishing consumer choice in the sector.
Amazon and iRobot mutually agreed to terminate the acquisition in January 2024, citing these regulatory concerns and acknowledging that there was “no path to regulatory approval in the European Union.” Additionally, it was reported that the U.S. Federal Trade Commission was also preparing a lawsuit to block the deal, further complicating the approval process.
The rejection by the European Commission reflects concerns over the potential implications for competition in the smart home technology market. Matt Schruers, president of the Computer and Communications Industry Association, criticized the potential rejection, emphasizing the importance of regulators acknowledging the potential impact on consumer options.
Schruers' argument suggests that blocking the deal might limit consumer options in the home robotics sector. This concern highlights a key point in the debate over Amazon's acquisition of iRobot. The deal included plans to integrate the Alexa voice assistant, smart thermostats, security devices, and wall-mounted smart displays, which could have expanded Amazon's range of smart devices.
The news of the likely rejection prompted a nearly 40% drop in shares for iRobot, closing at $14.3. This case exemplifies the rigorous antitrust scrutiny large tech acquisitions face, especially when they threaten to reduce market competition in emerging technology segments like smart home devices.
Technology giants, like Amazon, across multiple sectors such as finance, business, and technology, often face rigorous antitrust scrutiny when their acquisitions threaten to reduce market competition in emerging technology segments. For instance, the potential acquisition of iRobot by Amazon was expected to expand the tech giant's range of smart devices, but the rejection by the EU Commission underscores concerns about competition, potentially limiting consumer options in the home robotics sector.