Amazon’s proposed acquisition of iRobot is now facing a thorough antitrust review by the European Union.The deal, valued at $1.7 billion, in which the e-commerce giant aims to acquire the robot vacuum maker, was granted approval by regulators in the UK last month.
However, the EU regulators have now decided to conduct their own extensive examination. In a press release issued yesterday, the European Commission expressed their concerns.
They believe that the transaction could lead to a reduced competition in the robot vacuum cleaner (RVC) market and strengthen Amazon’s position as an online marketplace provider through various means.
The EU highlighted its initial concerns, stating that Amazon’s marketplace plays a crucial role in the sale of RVCs in several EU Member States.
The commission worries that Amazon might have the ability and incentive to hinder iRobot’s competitors by preventing them from selling rival robot vacuums on its marketplace.
This could be achieved by tactics such as prioritizing iRobot’s products in ad listings and blocking competitors’ access to certain ad services.
Consequently, this could result in higher costs for rivals to advertise and sell their products on Amazon’s marketplace, leading to higher prices, reduced product quality, and less innovation for consumers.
Another concern raised by the European Commission relates to Amazon potentially impeding competitors’ access to APIs for its AI assistant software, Alexa.
The interoperability with Alexa software and the Works With Alexa (WWA) certification are significant selling points for manufacturers and suppliers of RVCs to compete effectively.
The commission fears that if Amazon gains control of iRobot, it may seek to limit or downgrade rivals’ access to these essential tools.
Furthermore, the Commission is apprehensive about the data advantage Amazon would obtain from owning iRobot.
This data advantage could significantly benefit Amazon in its provision of online marketplace services to third-party sellers, including advertising services and other data-related markets.
By leveraging iRobot’s data, Amazon could potentially manipulate organic search results and advertisements on its marketplace, as well as personalize and target ads more effectively. This could create barriers to entry and expansion for Amazon’s competitors, ultimately harming consumers.
Margrethe Vestager, the EU’s competition chief, emphasized the dual role of Amazon as both an online marketplace and a retailer.
She expressed concerns that Amazon’s acquisition of iRobot could be utilized to impede rivals’ access to Amazon’s marketplace.
The in-depth investigation will also examine whether Amazon would exploit the data collected by iRobot to reinforce its position as an online marketplace provider.