The European Union’s antitrust investigation into Amazon’s $1.7 billion acquisition of iRobot, a robot vacuum cleaner maker, is set to proceed, according to sources familiar with the matter. This comes after the deal received approval in the UK. Amazon’s intention with the acquisition, announced in August last year, was to expand its range of smart devices, which includes the Alexa voice assistant, smart thermostats, security devices, and smart displays. iRobot, known for its Roomba robot vacuum, was established in 2002.
Following the publication of the Reuters story, iRobot shares experienced their largest drop since February of the previous year, declining by approximately 10 percent. Amazon’s shares also trimmed gains in response.
The European Commission is expected to launch a comprehensive four-month investigation after completing its preliminary review of the deal on July 6. During this initial phase, Amazon is unlikely to propose any remedies. However, it will have an opportunity in the coming days to persuade the EU competition watchdog that the acquisition will promote competition, although the odds may be against its favor.
Both the Commission and Amazon declined to comment on the matter. Amazon had previously stated that the market for vacuum cleaners is highly competitive, with numerous Chinese players involved.
In its recent decision, the UK competition agency supported Amazon’s argument, stating that it did not perceive Amazon to be utilizing its market power to the detriment of rival robot vacuum cleaner manufacturers.
Antitrust regulators worldwide have become increasingly cautious about allowing large technology companies to acquire smaller competitors due to concerns about the concentration of vast amounts of data within a few firms and the potential for dominant companies to leverage their position in entering new markets.