Amazon's Robo Vacuum Power Grab Sucks EU Attention

The European Commission (EC) has announced an in-depth investigation into Amazon's proposed acquisition of iRobot over concerns it may restrict competition in the robot vacuum cleaner market.

Amazon's $1.7 billion takeover was announced almost a year ago, in August 2022, but the EC has now decided that a full investigation is necessary to assess whether the merger may have an adverse impact on the market for robotic vacuum cleaners.

The Commission's concerns appear to center on Amazon itself being one of the prime (no pun intended) marketplaces for selling a wide range of goods, including robot vacuum cleaners, and that this may allow the company to promote iRobot's products over those of rivals.

Amazon may have the ability and the incentive to foreclose iRobot's rivals by preventing them from selling robo vacuums on Amazon's online marketplace and/or by degrading their access to it through several strategies, the EC stated.

These strategies might include favoring iRobot's products in both non-paid and paid results (advertisements) displayed in Amazon's marketplace, preventing rivals from accessing certain advertising services, or hiking the charges for rivals to advertise and sell their products on Amazon.

Another concern is that Amazon might prevent other robo vacuum makers from accessing the APIs for Amazon's Alexa software as well as the "Works with Alexa" (WWA) certification, or otherwise hamper the interoperability of rival products. The EC noted that access via Alexa and WWA certification appear to be important selling points for such devices.

A third issue is the user data collected by iRobot, which may provide Amazon with an advantage in online marketplace services to third-party sellers, according to the EC. This might enable Amazon to personalize and target advertisements, making it more difficult for rival providers to match Amazon's online marketplace services.

"Amazon is both an online marketplace and a retailer. We are concerned that, by acquiring iRobot, Amazon may use such a dual role to foreclose access by iRobot's rivals to its marketplace," said Executive Vice-President in charge of competition policy Margrethe Vestager.

The EC said that it had closely cooperated with other competition authorities during the initial investigation. The US Federal Trade Commission opened its own investigation in September last year, but has apparently still to announce a decision. The UK's Competition and Markets Authority watchdog gave its thumbs-up for the merger to go ahead last month.

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In a statement, Amazon told us: "We continue to work through the process with the European Commission and are focused on addressing its questions and any identified concerns at this stage. iRobot, which faces intense competition from other vacuum cleaner suppliers, offers practical and inventive products. We believe Amazon can offer a company like iRobot the resources to accelerate innovation and invest in critical features while lowering prices for consumers."

Colin Angle, chairman and CEO at iRobot, said: "iRobot faces intense competition in selling vacuum cleaners, including from China-based companies. We were pleased with the CMA's recent decision to clear the merger, and given the hyper competitive environment, we're disappointed that the EC has decided to proceed to an in-depth investigation. We are continuing to work cooperatively with the EC and other regulators in their review. We remain excited about the opportunity to work together with Amazon to continue innovating, bringing valuable products to customers, and making their lives easier."

In its financial results for the first quarter ended April 1, iRobot reported revenue of $160 million, down from $292 million in the same period a year ago. The company blamed "muted" orders during the first quarter of 2023, but said large orders from an etailer customer would ship in Q2. ®