Amazon’s (AMZN) proposed $1.4 billion acquisition of iRobot Corporation (IRBT) is likely to be blocked by EU antitrust regulators, according to a Wall Street Journal report. Though no final decision has been made yet, concerns are mounting that the deal would unfairly eliminate competition in the robot vacuum market.
iRobot is the maker of the popular Roomba autonomous home vacuums, while Amazon has its own brand of Alexa-enabled cleaning robots. Combining the Roomba maker with Amazon, which dominates e-commerce, raises red flags for regulators who are concerned about stifling consumer choices.
Yahoo Fiance’s Alexis Keenan breaks down the details.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor’s note: This article was written by Angel Smith
Video Transcript
– Well, shares of iRobot, the company behind Roomba vacuum cleaners, plummeting this morning on reports that a European Union’s antitrust regulators reportedly planning to block Amazon’s $1.4 billion buyout of the company. This marks yet another potential big tech acquisition being blocked as governments globally put up roadblocks. Let’s bring in Yahoo Finance’s Alexis Keenan who’s digging into this story for us. And Alexis, of course here, that’s a story over in Europe. But here in the US, we saw that big merger being blocked between JetBlue and Spirit this week.
ALEXIS KEENAN: Yeah, a lot of activity in the antitrust space, Akiko. And this one-time $1.4 billion deal now reportedly, according to “The Wall Street Journal,” is likely to be rejected by the European Commission. Those are the regulators over in Europe that deal with antitrust. Now Amazon’s acquisition of the vacuum maker, iRobot, came under concern across the pond as well as over here by the FTC, concern that it would kill competition in the robot vacuum market, if you will.
The commission has yet to make, a decision a final decision here. But what “The Wall Street Journal” is saying is that it is likely. Now that could really kill this deal altogether wherever it is, whether in Europe or in the US. But this pushback is really important kind of on a larger scale here. With putting this into context, it’s really part of a multinational, multi-agency push to foreclose on these very high-profile mergers and acquisitions and also anti-competitive conduct at large.
Now, in the US, as I mentioned earlier, the FTC has its own reported investigation into the iRobot deal, still investigating. We don’t know what is going to happen with the FTC’s inquiry at this point. But the FTC has already filed against Amazon recently in September bringing a suit against the company on conduct grounds, saying that its Amazon Prime business is operating in an anti-competitive way. Now if we look beyond Amazon, though, there’s also a number of cases that are big tech antitrust cases in addition to those– the airline one that you just mentioned.
Now you have the Department of Justice’s case that’s still pending conclusion. It went to trial in 2023 against Google, saying that the company is abusing its monopoly in the online ad market. You also have the FTC’s case that didn’t have success for the FTC against Microsoft trying to block its acquisition last year of Activision Blizzard. And also, those are just a few. There are others. You have states and the DOJ also with separate actions against Google in its search business.
But guys, this iRobot deal frustrating, probably for the company here. The company’s been in decline for a couple of years. This putting the stock under further pressure. The company is expected to report its full-year results for 2023 in February and expected to be down a roughly $7 a share on the year, guys.
– And so as we’re looking at this push that we’re continuing to see, obviously not just in the US, but also in Europe and other countries as well, what does this mean for the landscape for investors as they’re watching regulators striking down these deals? And investors really trying to make sense of why.
ALEXIS KEENAN: Yeah, so going back to some of those cases that we were just showing you on the screen there, there’s just a push whether it’s in the European Union, in the US to go after whether it’s antitrust alleged violations on the conduct side, saying that there’s a monopoly that’s operating in ways that it shouldn’t, that’s foreclosing on competition, or just killing these mergers these acquisitions all together, certainly earlier this week with the JetBlue Spirit attempted merger that won a court deciding to side with the DOJ and say that that would be problematic for customers in searching for favorable airline fares.
That’s a big one here. But the Biden administration back in 2021 put out an executive order saying that the DOJ, that the FTC, and other regulators in the US should really be rethinking antitrust in the way that the guidelines are written. There has been a draft that has gone out proposing some changes. But look, there is definitely a push here, and we’re seeing, I think– Although there’s been a decline in the number of cases filed by the DOJ and FTC since 2020, since President Trump’s last year in office, we are seeing this high-profile push and the administration going after these major, major US companies.
