Amazon on Monday said it was abandoning plans to buy iRobot, the maker of the self-driving Roomba vacuum, after regulators raised concerns that the deal would harm competition.
The announcement is a rare admission of defeat by Amazon, which has in recent years acquired an eclectic mix of companies such as Whole Foods and MGM Studios, and is a sign of how the world’s biggest tech companies are being forced to adjust their business practices. . products and policies as a result of tighter regulatory scrutiny worldwide, particularly in the European Union.
In November, EU antitrust regulators warned Amazon that they might try to block the deal because it could limit competition in the market for robotic vacuum cleaners. 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 include also robotic mops and air purifiers, were to 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 limiting competition, the deal would have given iRobot more resources to compete with other robotics companies.
“This outcome will deprive consumers of the faster innovation and more competitive pricing that we are confident would make their lives easier and more enjoyable,” David Zapolsky, Amazon’s senior vice president and general counsel, said in the statement.
Amazon isn’t the only company facing hurdles to completing acquisitions. In December, Adobe, the maker of Photoshop and Illustrator, called off its $20 billion acquisition of Figma, a maker of design collaboration tools, after it was challenged by regulators in the United States, the European Union and Britain.
In the European Union, oversight of the technology sector is expected to intensify in the coming months as a new law, the Digital Markets Act, comes into full force aimed at 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 struggling with declining sales and mounting losses, must reorganize without Amazon’s financial backing. The company’s share price fell more than 60 percent last month as the fate of the deal with Amazon came into question.
On Monday, iRobot said it would cut about 350 jobs, or about 30 percent of its workforce, as well as reshuffle its management ranks.
“The resolution of the Amazon deal is disappointing, but iRobot now looks to the future with a focus and commitment to continue building thoughtful robots and smart innovations at home,” said Colin Angle, the company’s founder, who is stepping down as CEO. advisor. in a statement.
Glen Weinstein, iRobot’s executive vice president and chief legal officer, has been named interim CEO.
