Amazon said on Monday it was abandoning plans to buy iRobot, the maker of the autonomous Roomba vacuum cleaner, after regulators raised concerns that the deal would harm competition.
He advertisement It’s a rare admission of defeat by Amazon, which in recent years has acquired an eclectic mix of companies such as Whole Foods and MGM Studios, and it’s a sign of how the world’s biggest tech companies are being forced to adjust their business practices, products and as a result of tightening regulatory scrutiny globally, particularly in the European Union.
In November, EU antitrust regulators warned Amazon that could try to block the deal because it could restrict competition in the robot vacuum cleaner market. The Federal Trade Commission was also reviewing the deal.
Amazon, which will pay iRobot a $94 million termination fee, said in a statement that “disproportionate regulatory hurdles” caused it to pull out of the deal, which was first announced in 2022. IRobot’s products, which also include mops robotics and air purifiers, would join a growing list of connected home products made by Amazon, including Ring home security systems and Echo smart speakers.
Amazon said that rather than restricting competition, the deal would have given iRobot more resources to compete with other robotics companies.
“This outcome will deny consumers faster innovation and more competitive pricing, which we are sure would have made their lives easier and more enjoyable,” David Zapolsky, senior vice president and general counsel at Amazon, said in the statement.
Amazon is not the only company facing obstacles 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, oversight of the tech sector is expected to intensify in the coming months as a new law, the Digital Markets Act, comes into full force with the aim of increasing competition in the digital economy. Last week, Apple announced a series 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 facing declining sales and mounting losses, must regroup without Amazon’s financial backing. The company’s stock price has fallen more than 60 percent in the past month as the fate of the Amazon deal came into question.
On Monday, iRobot saying would cut approximately 350 jobs, or about 30 percent of its workforce, in addition to reorganizing its management ranks.
“The termination of the deal with Amazon is disappointing, but iRobot now looks to the future with the goal and commitment to continue building thoughtful robots and smart home innovations,” said Colin Angle, the company’s founder, who will step down as CEO. . in a sentence.
Glen Weinstein, executive vice president and chief legal officer of iRobot, was named interim CEO.
