Amazon and iRobot just terminated their $1.7 billion acquisition deal

Back in August 2022, the largest e-commerce company in the world moved to acquire the largest robot vacuum company in the world. Amazon attempted to acquire iRobot, the company that manufactures Roomba vacuums. While some entities didn’t see much of an issue with this, The EU was different. According to the company, Amazon and iRobot agreed to terminate the acquisition deal.

In a recent press release, Amazon stated that the deal has “no pathway to regulatory approval in the European Union.” So, the hefty $1.7 billion deal will not see the light of day. Obviously, this news disappointed both companies. iRobot would have gotten nearly $2 billion in its pocket, and who knows how much money iRobot was going to make for Amazon in the long run? However, these are the types of deals that really make regulatory bodies blow steam from their ears.

Amazon and iRobot terminate their acquisition deal

This deal faced the usual scrutiny from my regulatory bodies. The EU investigated the deal along with the United States FTC and British regulators. Throughout the deal’s path to regulatory approval, it didn’t seem to have too much friction. A report by Reuters back in November also pointed to the EU approving the deal.

However, shortly after, the EU laid down a list of objections to this deal. One objection is that the deal could give Amazon the “ability and the incentive to foreclose iRobot’s rivals.” Basically, it could give Amazon the ability to vigorously push iRobot’s products to the top of search results and prioritize those devices over other robot vacuums. The company has been in hot water for allegedly performing actions like these with its own Amazon products.

So, the EU fears that Amazon might boost iRobot’s vacuums and bury its competition. This is something similar to what the FTC accused Amazon of doing in its massive anti-competitive lawsuit that it launched against the company.

This objection makes sense

Let’s face it, Amazon is a major company, and it did not get that way by being a patron saint. Big companies have to pull big (and sometimes illegal) moves to stay at the top of the game. We’re not saying that Amazon was going to unlawfully boost iRobot’s ranking. However, the deal, unfortunately, creates a pathway to doing so.

Also, when large companies buy other large companies, many regulatory bodies view that as anti-competitive. Amazon is the largest e-commerce company in the world, and it tried to buy the largest robot vacuum company in the world. That spells bad news for competition, as smaller companies and startups would then have to compete with iRobot supercharged by Amazon’s monumental reservoir of funds. Not only that, but Amazon has sway over the digital marketplace. So, that would, ostensibly, stifle competition and keep these two companies at the top.

So, the deal didn’t go through, and this might actually be for the better.