iRobot, creator of Roomba, to cut 31% of staff, CEO departs post-failed acquisition.
Amazon has decided to withdraw its intended $1.4 billion (£1.1 billion) purchase of iRobot, a robot vacuum cleaner company, due to resistance from the European Union. As part of the termination agreement, Amazon will provide a $94 million break fee to iRobot. In response, iRobot swiftly revealed intentions to reduce its workforce by 31%, eliminating 350 positions, and announced the departure of its CEO.
On January 18, The Wall Street Journal disclosed that the European Union’s executive body was getting ready to oppose the purchase of the Roomba manufacturer and had communicated its intended stance to Amazon.
In a collective statement, Amazon and iRobot asserted that the acquisition faced insurmountable obstacles to secure regulatory approval in the European Union, hindering any progression for Amazon and iRobot as partners.
David Zapolsky, Amazon’s general counsel, remarked, “Excessive and disproportionate regulatory challenges deter entrepreneurs who should view acquisitions as a viable path to success, thereby negatively impacting consumers and competition—elements that regulators claim to safeguard.”
In November, the European Commission officially expressed apprehensions about the acquisition, citing potential constraints on competition within the robot vacuum cleaner market. The commission’s concerns encompassed Amazon potentially diminishing the prominence of rival vacuum cleaners on its retail platform.
In August 2022, Amazon unveiled the acquisition, seeking to broaden its array of smart home devices, in addition to its ownership of the Alexa smart speaker and Ring doorbell.
Although the UK competition regulator granted approval to the takeover in June of the previous year, the Federal Trade Commission (FTC), the United States competition watchdog, had also been scrutinizing the deal and subsequently initiated a comprehensive legal action against the company.
Verity Egerton-Doyle, a partner at the UK law firm Linklaters, emphasized that Amazon’s decision not to provide concessions in response to the commission’s formal statement of objections, outlining its concerns, ultimately led to the downfall of the deal.
Witt noted that the European Union’s reservations regarding the deal mirrored certain issues raised in the FTC’s broader September lawsuit against Amazon. The lawsuit alleges that the company gives preferential treatment to its own products over those of others.
The Open Markets Institute, a research organization focused on studying the effects of corporate monopolies, commended the commission on Monday for taking a stand against Amazon.
