$1.7 Billion 'Big Deal' Falls Through
iRobot Cuts 31% of Workforce, Stock Drops 15%
EU Fully Implements Digital Markets Act (DMA)
The world's largest e-commerce company Amazon's plan to acquire iRobot has fallen through.
On the 29th (local time), The New York Times (NYT) reported that Amazon abandoned its plan to acquire iRobot, the maker of the robotic vacuum cleaner 'Roomba,' for $1.7 billion (approximately 2.27 trillion KRW).
This comes 17 months after Amazon announced its plan to acquire iRobot in August 2022, and Amazon will pay iRobot a contract termination fee of $94 million (approximately 125 billion KRW).
In June last year, Amazon received a green light for the iRobot acquisition from the UK's Competition and Markets Authority (CMA). However, a month later, the European Union (EU) antitrust regulators began an in-depth investigation, and in November of the same year, regulators warned that Amazon could limit competition in the robotic vacuum cleaner market, potentially blocking the deal.
David Zapolsky, Amazon's Senior Vice President and General Counsel, said in a statement, "We are disappointed that Amazon's acquisition of iRobot did not go through," adding, "This decision undermines innovation and competitive pricing that would have enriched consumers' lives."
Margrethe Vestager, EU Commissioner for Competition, said, "Had this deal gone through, Amazon could have monopolized the robotic vacuum cleaner market by restricting competitors' access to the Amazon Store," adding, "The resulting price increases, quality declines, and reduced innovation would have been borne entirely by consumers."
On the same day, iRobot announced a major restructuring plan along with the withdrawal from the merger with Amazon. Approximately 31% of iRobot's entire workforce was laid off under the pretext of cost reduction. Colin Angle, CEO of iRobot, also stepped down taking responsibility for the failed merger. On the same day, iRobot's stock price fell 15% intraday, closing at $15.50.
According to the NYT report, the collapse of Amazon's big deal is seen as a sign that giant IT companies must readjust their business practices, products, and service policies amid a trend of strengthened antitrust investigations led by the EU and other countries.
In fact, in December last year, Adobe, the maker of Photoshop and Illustrator, abandoned its $20 billion acquisition of Figma, a design collaboration tool maker, following investigations by regulators in the US, EU, and UK.
In the EU, the Digital Markets Act (DMA), which aims to activate competition in the digital platform market and limit the market dominance of big tech companies, is set to be fully implemented within months. According to the NYT report, in response to these changes in the business environment, Apple announced many changes to comply with the DMA, including allowing customers for the first time to use alternative platforms to the App Store.
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