The European Union is set to clear Amazon’s (AMZN.O) $1.4 billion acquisition of robot vacuum maker iRobot (IRBT.O), three people familiar with the matter said on Thursday. The deal is expected to be approved without conditions, despite concerns by the EU’s competition regulator that it would restrict competition in the market for home robotic cleaners and boost Amazon’s position as an online marketplace.
Antitrust enforcers around the world have stepped up scrutiny of Big Tech acquiring smaller rivals, concerned about the accumulation of troves of data by a few companies and big players leveraging their dominance into new markets. The EU’s competition commissioner, Margrethe Vestager, has called for a broad review of Big Tech mergers and acquisitions.
The EU has already scrutinized the iRobot-Amazon deal, and Vestager’s staff is expected to recommend approval of the acquisition. But there are two remaining hurdles: The US Federal Trade Commission and the UK’s competition watchdog are also examining the merger, and both could require remedies to ensure that the acquisition doesn’t limit consumer choice or harm consumers.
Regulators on both sides of the Atlantic tend to be wary of Big Tech acquiring smaller rivals with access to large volumes of personal data, but they rarely block such deals outright. For example, despite objections from pro-privacy campaigners, the EU recently cleared Microsoft’s (MSFT.O) acquisition of Activision Blizzard (ATVI.O). The EU generally prefers to demand remedies in such cases.
iRobot and Amazon both sell their products on their respective online marketplaces, and the EU worries that Amazon will use its power in the marketplace to direct searches for the Roomba vacuum cleaner toward its device and hurt competitors like Shark and Dyson that don’t sell through the e-commerce site. The EU will also look closely at whether the acquisition gives Amazon an unfair advantage in the market for smart home devices by giving it access to user data.
However, iRobot CEO Colin Angle said that such concerns are overstated this week and that the deal is “a compelling strategic move for both our shareholders and customers.” He also pointed out that iRobot has long been running on Amazon’s cloud service and that integrating speech recognition and other Amazon technologies into its vacuum cleaners will help improve customer experience. The company plans to continue working with regulators to address their questions and concerns about the transaction. The acquisition is set to close in the fall. The companies did not disclose the value of the deal. iRobot shares rose 19% to $61 in midday trading. Amazon’s shares were little changed. The stock is up almost 35% this year, while the S&P 500 index has gained just 0.1%. The company is scheduled to report third-quarter earnings on Tuesday. (See related: Amid Big Tech’s Rise, Investors Bet on Amazon’s Strengths.) — Leah Nylen contributed reporting.