Tech regulators score rare victory in thwarting Amazon’s $1.7B iRobot acquisition

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Amazon will scrap its planned $1.7 billion acquisition of Roomba-maker iRobot after the European Commission said the deal would restrict competition in robot vacuums.

The companies said they abandoned the deal amid rising legal challenges to tech mergers, as regulators around the world raise concerns about the ways large tech companies have built their dominance by buying up smaller competitors.

The rare victory for tech regulators comes nearly 18 months after Amazon first announced its plans for the purchase. Amazon will pay iRobot a $94 million termination fee.

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” said David Zapolsky, Amazon senior vice president and general counsel. “Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see an acquisition as one path to success, and that hurts both consumers and competition — the very things that regulators say they’re trying to protect.”

Amazon saw no path forward for the deal after the European Commission signaled that even remedies to the deal would not address its concerns, so the companies chose not to formally offer them, according to a person familiar with the matter, who spoke on the condition of anonymity to discuss the deliberations.

Amazon founder Jeff Bezos owns The Washington Post.

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Tech companies have rarely walked away from mergers amid antitrust challenges, especially in the United States, where companies including Microsoft and Meta have been successfully challenging such lawsuits in court.

But international lawmakers are increasingly deterring deals. Last year, Adobe called off its $20 billion acquisition of the design company Figma because of antitrust challenges in Britain.

Amazon’s acquisition of iRobot also faced antitrust challenges in the United States. Last week, Federal Trade Commission lawyers notified Amazon of their intent to challenge the deal as well, according to a person familiar with the matter who spoke on the condition of anonymity to discuss the agency’s plans.

The company was scheduled this week to meet with members of the FTC for a so-called “last rites” meeting, typically a final meeting where companies have a chance to make their cases before commissioners vote on bringing a lawsuit, the person said.

iRobot said in a separate statement it will cut 350 employees, or about 31 percent of the company’s work force as part of a restructuring plan to return to profitability.

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