Amazon Gives up on Roomba

Last year, Amazon announced that it would acquire iRobot, the makers of Roomba automated vacuum cleaners, for 1.7 billion. Months later, they agreed to give up on the merger.

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” said Amazon’s General Counsel. “We’re believers in the future of consumer robotics in the home and have always been fans of iRobot’s products, which delight consumers and solve problems in ways that improve their lives. Amazon and iRobot were excited to see what our teams could build together, and we’re deeply grateful to everyone who worked tirelessly to try and make this collaboration a reality. This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable.”

Clearly, this isn’t so much a breakup as a case of star-crossed lovers. The bad guys in the scenario? Regulators, especially in the EU. “Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition—the very things that regulators say they’re trying to protect,” the statement continued.

What regulations?

The European Commission is concerned about anti-competitive practices, according to Gizmodo. There and in other sources, reporters point out that Amazon has a lot of control over what consumers see at the Amazon website. With its “Amazon choice” offerings, paid ad placements, and insights into competitors’ prices, Amazon has lots of leverage to pressure brands on prices and marketing methods.

Privacy is another issue, although the European Commission did not bring it up. Roomba devices can make maps of customers’ homes, and Amazon can then use that data to target customized advertising.

Now what?

Although the UK approved the merger, Amazon announced that they saw “no path” to EU approval, and the U.S. Federal Trade Commission was still scratching their heads. The deal is off.

iRobot is restructuring, laying off about a third of their workforce, closing offices and shutting down locations, and losing some C-suite members. Their stock is also down by a third since the deal was first struck. They are also backing off from new products they had been working on. Amazon may not be affected much.

The Atlantic was firmly opposed to the acquisition, citing both the privacy issue and amazon’s increasing disproportionate share of all retail and many other aspects of our lives.

On the other hand, Amazon has been active in robotics and automation for many years, and has been working on domestic robots for some time. Acquisition of Roomba’s parent company seems like a sensible move for them. Their claim that this will have an impact on innovation in the home robot space seems convincing.