The EU will look into Amazon’s acquisition of iRobot for $1.7 billion

According to a report, the EU will look into Amazon’s acquisition of iRobot for $1.7 billion.

The latest movement that large tech companies may be subject to more scrutiny when dealing deals is the EU’s impending antitrust lawsuit against Amazon over its proposed $1.7 billion acquisition of Roomba-maker iRobot.

According to two people with direct knowledge of the decision, regulators in Brussels have sent the $1 trillion tech behemoth several in-depth questions about the proposed sale. This step suggests they are training for a formal breakdown.

Investigators at the European Commission, the executive arm of the EU, are concerned about privacy. The US Federal Trade Commission is exploring the acquisition because it could expand Amazon’s market dominance in the home electronics industry.

According to sources with knowledge of their plans, antitrust authorities will likely open a formal inquiry into how the Roomba functions, especially the vacuum cleaner’s ability to capture images as it wanders around a house.

A person with direct knowledge of the EU’s concerns said that officials are seeking to ascertain how important this transaction is to Amazon and how it might be used by the business to combine data it already collects with Alexa (the voice assistant technology) to gain a competitive advantage.

It comes in response to MIT Technology Review’s study, published in December, describing how a Roomba robot under development that paid volunteers was testing could take pornographic pictures. According to the magazine, several photographs subsequently emerged on online forums.

IRobot has stated that it is looking into the matter and has cut off communication with a service partner that handled the data processing. Global regulators are paying more attention to the data implications of mergers, especially those spearheaded by major tech companies like Apple and Meta.

After years of lax regulation of such acquisitions, such actions have been taken. Even though WhatsApp and Instagram held the personal information of millions of users globally, Facebook bought both companies with comparatively little research.

According to two sources with knowledge of the investigation, Amazon is getting ready to counter the EU’s worries by emphasising limitations placed on the Roomba gadget and saying that it just has basic sensor mapping that is unlikely to breach any data privacy.

They claimed that the tech behemoth would also argue that the acquisition should go through because purchasing iRobot does not give Amazon a distinct competitive edge over rivals, given the wide range of competing products on the market.

A first “phase 1” inquiry by the EU regulators would still take weeks, according to people with direct knowledge of the discussions, and the timeline might change. They noted that if Amazon could not allay worries, officials would launch a more thorough “phase 2” investigation.

US politicians have urged the FTC to reject the agreement. Soon after the transaction was first revealed in August last year, Democratic Senator Elizabeth Warren said, “The FTC should oppose this proposed merger to defend competition, cut consumer prices, and reign in Amazon’s well-documented anti-competitive behaviour.” The FTC has since requested more details about the transaction. Amazon or the European Commission did not address a prospective investigation.

Investigation of Amazon’s iRobot purchase is ongoing.

Yes, that’s correct. Smart vacuums need to see, and when Amazon bought iRobot, the company was likely interested in more than simply securing a monopoly on the home products industry. I was also interested in your data. The Verge said that after the acquisition, iRobot’s technologies can create maps of your complete home and how it changes over time.

Amazon now has access to a wealth of data that it may use to present you with relevant advertisements. Even more dystopian-ally, Amazon has a history of cooperating with law enforcement in sharing information from its products, such as the Ring doorbell.

In an email to Gizmodo, an Amazon representative said, “We’re cooperating with the relevant regulators in their evaluation of the acquisition.” According to reports, an official antitrust investigation’s launch is still a few weeks away.

The Amazon spokesman also told Gizmodo over the phone that this probe isn’t necessarily brand-new because Amazon and iRobot agreed to be exempt from enforcement under the HSR Act by the European Commission in iRobot’s September 2022 filing with the Securities and Exchange Committee.

Amazon’s journey towards iRobot has been rocky. While the possibility of an investigation looms, iRobot is said to have fired 10% of its employees due to the Amazon agreement. However, as the acquisition process moves forward, 85 of iRobot’s approximately 1,254 employees will be let go, according to reports from numerous news outlets this week.

About 7% of the employees at Roomba manufacturer iRobot will be let go.

iRobot, the company that makes Roombas, revealed plans to lay off around 7% of its workers. According to iRobot’s fourth-quarter financial report, the cutbacks will affect about 85 people. As of December 31, 2022, the business employed 1,254 people.

The business reported $84.1 million in losses for the fourth quarter against $357.9 million in revenue. IRobot anticipates “muted” orders to appear in the first quarter of 2023. While being acquired by Amazon, IRobot is laying off staff members. The e-commerce behemoth revealed in August last year that it would pay $1.7 billion to acquire iRobot; the FTC is still investigating the purchase for antitrust violations.

IRobot is the latest in a string of IT firms that have announced layoffs recently, as increasing interest rates and sluggish consumer demand have stoked concerns about an impending recession and forced firms to make cost cuts. While Meta, Google, Salesforce, and other companies announced significant employment layoffs, Amazon laid off over 18,000 corporate employees.

The iRobot job cuts come after the business let go of approximately 100 workers in August, citing the need to increase profitability and better match its cost structure with short-term sales and cash flow.

According to the company’s results release, the most recent reductions are being made “in anticipation that market conditions will continue to be difficult through 2023.” Due to the layoffs, an impairment charge of $4 million will be made.

edited and proofread by nikita sharma