Amazon’s planned purchase of Roomba manufacturer iRobot to the tune of $1.7 billion could boost the amount of money it spends on acquisitions to new heights, when it is combined with its acquisition from MGM in the amount of $8.45 billion and the proposed deal to buy primary care provider One Medical for $3.9 billion.
But do U.S. antitrust regulators let this take place?
This is the most important issue in the wake of Amazon’s announcement on Friday morning to purchase iRobot the Boston-based company that makes the world’s most popular robotic vacuum.
According to the plan, the deal will propel Amazon into the top spot in the field of home robots. It is believed that the Seattle company has only even begun to explore the market after the introduction of its Astro robot in the year before.
Amazon also made a similar decision in the field of warehouse robots through its acquisition Kiva Systems a decade ago and provided a technology platform for the company to drastically increase automatizing its warehouses.
The U.S. Federal Trade Commission has made its latest outlook regarding acquisitions of technology clear in the announcement of July 27th that it would try to prevent Facebook parent Meta from buying the virtual reality fitness app Supernatural. FTC officially John Newman scolded Meta for its attempt to buy market positions rather than earning the money on its merits.
In the terms of the agreement that was disclosed within an SEC filing on Friday morning, Amazon would pay a $94 million termination fee the iRobot in the event that the deal is ultimately rejected through antitrust regulatory authorities.
Following the introduction of Roomba twenty years ago the Boston-based iRobot announced a of more than 40 million sold the end of last year. In the last period of fiscal, iRobot shipped more than 5.6 million units, surpassing the sales of Amazon’s recently launched Astro robotic home, which is currently available in a limited preview.
Before becoming FTC chairwoman, agency head Lina Khan was the subject of headlines in 2018 with the Yale Law Journal article, Amazon’s Antitrust Paradox, advancing a central argument in the movement to limit the power of technology giants.
The Amazon iRobot deal comes with its own privacy issues due to the wealth of home-based data that Amazon could gain access through the Roomba devices that are able to inspect the inside of homes and clean them in a completely autonomous manner.
In a statement made to Economic Pitch in a statement to Economic Pitch , an Amazon spokesperson stated Protecting information about customers is always incredibly important for Amazon and we are confident that we’ve done a great job of stewarding of the data of our customers across all of our operations. We value trust from our customers, which is something that we’ve put a lot of effort into to earn and work hard to keep each day.
Consumer Reports, for one has given iRobot excellent scores for data security. The sheer volume of data available could provide Amazon an advantage in competition as it provides a base to improve and differentiate its work in home robotics.
Discussions on about the iRobot agreement, antitrust and competition lawyer Ethan Glass of Cooley LLP said to Reuters that there’s an three in four probability of an in-depth investigation and a one in four chance of being challenged from the FTC.
The critics of Amazon have been quick to signal warnings. Ron Knox, a senior researcher and writer for the Institute for Local Self-Reliance has said that the deal may represent the largest, most risky and threatening acquisition of the company’s history.
Others saw Amazon’s announcement as a continuation of an ongoing trend.
It’s evident that Amazon is trying to find its own position within the Smart Home market and add another method of intrusiveness to monitor its customers stated Sarah Miller the executive director of the American Economic Liberties Project in a statement that was released following the Amazon announcement.
Miller said, Whether it’s Amazon rolling up Roomba and OneMedical, Facebook acquiring Within or Google purchasing Mandiant, Congress needs to intervene, stop the Big Tech acquisitions, and provide full resources to the FTC during the in the interim.
From an Congressional standpoint The time of the announcement by Amazon is noteworthy as it comes on a Friday in the midst of Congress is in recess. U.S. House and Senate take a break to enjoy their August recess. The Senate and House are also on vacation, with an antitrust bill that is facing an undetermined future.
According to the iRobot’s SEC filing in the SEC filing, the Amazon agreement specifies the Outside date of August. 4 2023, which is 1 year after now as the date for concluding the contract, and includes two extensions of six months, prior to the time a termination fee could be paid.
Amazon did not mention the possibility of antitrust objection when it made its announcement in addition to mention that it is subject to review by the regulatory authorities as well as iRobot shareholders’ approval as part of customary closing terms.