Michelle ThompsonAfter the deal failed, Roomba announces intentions to cut 31% of its personnel and fire its CEO.
Amazon has halted its planned $1.4 billion (£1.1 billion) acquisition of iRobot, the maker of the Roomba, due to EU resistance.
The e-commerce company will pay a $94 million break fee to iRobot, which promptly announced plans to eliminate 31% of its employment, or 350 employees, as well as the departure of its CEO.
The Wall Street Journal reported on January 18 that the EU’s executive arm was ready to oppose the merger and had informed Amazon of its anticipated position.
In a joint statement, Amazon and iRobot stated that the takeover had “no path to regulatory approval in the European Union, preventing Amazon and iRobot from moving forward together”.
David Zapolsky, the general counsel at Amazon, said: “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 European Commission formally expressed reservations about the agreement in November, claiming that it could limit competition in the robot vacuum cleaner sector. The commission was concerned that Amazon had reduced the visibility of rival vacuum cleaners on its selling platform.
Amazon announced the agreement in August 2022. The online retailer, which already owns Alexa and Ring, was looking to broaden its portfolio of smart home products.
The UK competition regulator approved the takeover in June of last year. The Federal Trade Commission, the US competition authority, had also looked into the agreement.
Campaign groups from both sides of the Atlantic have warned against the agreement. In September 2022, a collection of US organizations, including the Open Markets Institute and the National Domestic Workers Alliance, wrote to the FTC’s head, Lina Khan, claiming that the agreement would “endanger fair competition and open markets while also jeopardizing consumer privacy.”
Foxglove Legal, a tech watchdog group in the United Kingdom, argued the proposed merger was an example of Amazon’s tendency of “‘snuffing out’ innovative entry and broader competition in existing and emerging markets”.
Colin Angle, the founder of iRobot, who stepped down as chair and CEO as a result of the news, described the termination of the transaction as “disappointing”. He went on to say: “iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better, and that our customers around the world love.”
