Amazon, new Antitrust trouble: purchase of iRobot blocked
In August 2022, Amazon announced its intention to acquire iRobot, a leading company in the home cleaning industry. The two companies quickly reached an agreement to close within a few months. However, there is now a real risk that the agreement could be called into question, since the regulators of various countries, especially European ones, are ready to intervene, drawing attention to the issue of competition, as reported by Il Sole 24 Ore. This situation significantly complicates the outlook, and the market reaction in the last few hours has been extremely negative. The value of the shares of the Bedford, Massachusetts company, manufacturer of the famous Roomba robot vacuum cleaners, hsuffered a heavy fall, losing over 30% during yesterday’s trading, after -14% the previous day.
These merciless numbers further aggravate an already difficult general picture, with iRobot shares having fallen by 53% since the day of the announcement of the agreementor, reflecting the growing doubts of the market. A step back: the agreement between Amazon and iRobot is dated August 2022, with a value of 1.4 billion dollars. Amazon’s main goal was to enrich its portfolio of smart devices, which includes the Alexa voice assistant, smart thermostats, security devices and other home automation products. The Internet of Things sector is growing rapidly, and it’s a territory that Amazon has controlled for some time, with low-cost devices sold on its Marketplace. iRobot was, and still is, a significant asset for the e-commerce giant. However, a year and a half into the deal, regulators began scrutinizing the deal.
During the meeting with the European Commission last week, Amazon has been informed that the agreement may be considered invalid. The main reason is the fear of Amazon’s strengthening dominance in the sector, according to the European Union. The Federal Trade Commission also seems to be investigating the same issue, an indiscretion that in recent days had already contributed to the collapse of iRobot’s stock on the stock market. Regulators worry that acquiring smaller competitors could limit access to large amounts of customer data and further consolidate control of the market by a few companies. If confirmed, the European Commission’s decision would represent the second regulatory block to operations in the tech sector in a few weeks. The previous December, Adobe backed out of a $20 billion deal with design software maker Figma, citing difficulties in antitrust approvals in Europe and the UK. The companies had announced the cash-and-stock deal in September 2022, but a preliminary review had indicated a “substantial decrease in competition” in the global design software market. The companies had therefore decided to withdraw from the agreement. It remains to be seen whether a similar situation awaits Amazon and iRobot.
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