Amazon’s $1.7 billion acquisition of iRobot, the robot vacuum cleaner maker, is now facing a full-scale antitrust investigation by the European Union (EU), following the deal’s approval in the UK. The EU’s move raises concerns about potential competition issues, prompting scrutiny over Amazon’s expansion into the smart device market.
The acquisition, announced by Amazon in August last year, aimed to bolster its portfolio of smart devices, including the popular Alexa voice assistant, smart thermostats, security devices, and wall-mounted smart displays. iRobot, known for its Roomba robot vacuums, has been a prominent player in the industry since introducing its first robot vacuum in 2002.
In response to the news of the EU investigation, iRobot shares experienced a significant drop of approximately 10 per cent, marking their largest percentage decrease since February of the previous year.
Reportedly, the European Commission is set to commence a four-month investigation after concluding its preliminary review of the deal on July 6. During this initial phase, Amazon is unlikely to propose any remedies to address the concerns, further increasing the challenges it faces in convincing the EU competition watchdog that the acquisition is pro-competitive.
Both the European Commission and Amazon declined to comment on the matter. Amazon had previously stated that the vacuum cleaner market is highly competitive, emphasizing the presence of numerous Chinese players.
The UK competition agency, in its recent decision, supported this argument by asserting that it did not see Amazon exploiting its market power to disadvantage rival robot vacuum cleaner manufacturers. However, the EU antitrust regulators are adopting a more cautious approach towards major tech companies acquiring smaller rivals, as they express concerns about data accumulation by a few dominant firms and the potential leveraging of market dominance into new sectors.
The European Commission’s expected announcement of an in-depth investigation into the Amazon-iRobot deal signifies its intent to thoroughly examine the antitrust implications before making a final decision. This development underscores the increased scrutiny faced by tech giants in their pursuit of acquiring smaller companies, as regulators seek to ensure fair competition and prevent the concentration of power in the industry.
The acquisition of iRobot would have further diversified Amazon’s smart device lineup, offering consumers a broader range of innovative home automation solutions. However, with the EU investigation looming, the future of the deal remains uncertain, leaving both companies and investors awaiting a resolution.
It is important to note that Amazon’s cooperation with regulatory authorities during the review process will play a crucial role in determining the outcome of the investigation. The company has expressed its willingness to work closely with relevant regulators, but the road ahead appears challenging as it navigates the complex landscape of antitrust regulations and competitive concerns.
