Why Amazon-iRobot Acquisition Is Facing So Much Anti-Trust Concerns?
The Competition and Markets Authority (CMA), the United Kingdom's competition regulator, announced recently that it had initiated a "Phase 1" probe into Amazon.com Inc's proposed $1.7 billion acquisition of iRobot Corp.
Politicians in the United States may not be the only ones concerned about Amazon’s potential acquisition of iRobot. It has now been established that European Union officials are questioning Amazon in a formal query. The European Commission is investigating potential privacy concerns, like the ability of Roomba robot vacuums to take pictures. Amazon may combine the images with Alexa data to formulate a “competitive advantage,” according to officials.
The Competition and Markets Authority (CMA), the United Kingdom’s competition regulator, announced recently that it had initiated a “Phase 1” probe into Amazon.com Inc’s proposed $1.7 billion acquisition of iRobot Corp, manufacturer of the Roomba vacuum cleaner. The UK watchdog’s analysis comes when antitrust bodies, comprising those in the United States and the European Union, are increasingly suspicious of large corporations purchasing smaller competitors. Amazon, along with Microsoft, is now under an antitrust probe in the United Kingdom after the communications regulator stated that several characteristics of the cloud market, like switching costs, were cause for worry.
The CMA, at this moment, notifies Amazon.com and iRobot Corporation that the merger notice provided by Amazon revolving around Amazon’s acquisition of iRobot meets the requirements of section 96(2) of the Act. The starting period set in section 34ZA(3) of the Act revolving around the Merger will thus commence on the first working day after the date of the statement, i.e. on April 19, 2023. As a result, the deadline for the CMA to determine whether to send the Merger to a Phase 2 study is June 16, 2023.
Amazon stated that it was cooperating with the appropriate regulators to evaluate the agreement. According to an iRobot spokesperson, the company is still cooperating with the FTC and other regulatory bodies in the United States. The CMA stated that it has until June 16 to determine whether the Amazon-iRobot Merger will lessen competition in the UK.
Why is there so much vigilance in Amazon mergers?
Apart from iRobot, other acquisitions by the tech giant also have to face the watchdog’s lenses.
Amazon said in August 2022 that it will purcahse iRobot, the developer of the Roomba vacuum. In the marketplace, the acquisition emerges to be a large online retail marketplace acquiring a popular device to sell to its devoted customers. Roomba is a popular consumer product, with iRobot selling 40 million of them in the last two decades. The device’s smooth, rotating design has earned it a large share of the $3 billion-a-year robot vacuum industry; three-quarters of all smart vacuums sold in the United States sport the Roomba brand. In that sense, the acquisition makes sense.
However, there is a strong feeling that Amazon is not interested in cleaning your floors. What it seems to be about developing the company’s reach into people’s lives—should cause concern for everyone.
Some potential loopholes of the Amazon-iRobot bond.
MIT Technology Review publicized that photographs shot by development versions of Roomba J7 vacuums had made their way to secret Discord and Facebook groups. iRobot stated at the time that the technology was never used in production models, was explicitly kept for testing, and contained a caution to remove “sensitive” things from Robovac’s vision. The results provoked iRobot to sever relations with Scale AI. This business uses contractors to classify data for AI training – it looked that staff working on the project leaked the images.
Lina Khan, FTC Chairperson, submitted an important analysis in the Yale Law Journal in 2017, noting potential antitrust problems with Amazon. The report is largely recognised for igniting a national argument revolving around the antitrust legislation in the United States and whether it satisfactorily holds Big Tech platforms responsible.
Conclusion.
Under new CEO Andy Jassy, Amazon emerges to be pursuing acquisitions more aggressively at a time when the regulatory body has moved to ban similar mergers by Big Tech. The possible challenge arrives as the EU vows to be stricter on Big Tech corporations like Amazon when it comes to probing suspected privacy violations. Advocates for civil liberties have accused the EU of being too soft and delayed in dealing with these violations. The inquiry into the iRobot transaction would not be directly related to this crackdown, but it will demonstrate that privacy is an essential priority for merger evaluations.
