Amazon agrees to buy Roomba maker iRobot for $1.7bn | Amazon

Amazon announced it has agreed to acquire the vacuum cleaner maker iRobot for approximately $1.7bn, scooping up another company to add to its collection of smart home appliances amid broader concerns about its market power.

iRobot sells its products worldwide and is most famous for the circular-shaped Roomba vacuum, which is equipped to integrate with various smart home systems.

The acquisition, announced on Friday, is part of Amazon’s bid to own part of the home space through services and accelerate its growth beyond retail, said Neil Saunders, managing director at GlobalData Retail.

The appliance would join the voice assistant Alexa, the Astro robot and Ring security cameras and others in the list of smart home features offered by the Seattle-based e-commerce and tech giant.

So far, Amazon has not had much success with household robots. The company’s Astro robot, which helps with tasks like setting an alarm, was unveiled last year at an introductory price of $1,000. But its rollout has been limited and has received a lackluster response.

The iRobot acquisition, however, and the company’s strong market reputation provide a “massive foothold in the consumer robot market” that could help Amazon replicate the success of its Echo line of smart speakers, said Lian Jye Su, a robotics industry analyst for ABI Research .

Su said it also illustrates the shortcomings of consumer robotics vendors like iRobot, which struggled to expand beyond a niche product and was in a “race-to-the-bottom” competition with Korean and Chinese manufacturers offering cheaper versions of a robotic vacuum.

iRobot’s quarterly results, which were released on Friday, showed revenue plunged 30% primarily on order reductions and delays. The company also announced it was laying off 10% of its workforce.

Amazon said it will acquire iRobot for $61 per share in an all-cash transaction that will include iRobot’s net debt. The company has total current debt of approximately $332.1m as of 2 July. The deal is subject to approval by shareholders and regulators. Upon completion, iRobot’s CEO, Colin Angle, will remain in his position.

Noting that iRobot has been running its robotics platform on Amazon’s cloud service unit AWS for many years, Su said the acquisition could lead to more integration of Amazon speech recognition and other capabilities into vacuums.

The iRobot deal comes as anti-monopoly advocates continue to raise concerns about Amazon’s increasing dominance. The purchase is Amazon’s fourth-largest acquisition, led by its $13.7bn deal to buy Whole Foods in 2017. Last month, the company said it would buy the primary care provider One Medical in a deal valued at roughly $3.9bn, a move that expanded its reach further into healthcare.

On Friday, groups advocating for stricter antitrust regulations called on regulators to block the iRobot merger, arguing it gives Amazon more access into consumers’ lives and furthers its dominance in the smart home market.

The Roomba device, for example, allows users to map out the entirety of their homes room by room and store the maps in the iRobot app for future use. Consumers can then remotely schedule regular cleanings or manually start cleaning jobs of specific rooms directly from the app.

“The last thing American and the world needs is Amazon vacuuming up even more of our personal information,” said Robert Weissman, president of the progressive consumer rights advocacy group Public Citizen.

“This is not just about Amazon selling another device in its marketplace,” Weissman said. “It’s about the company gaining still more intimate details of our lives to gain unfair market advantage and sell us more stuff.”

Landmark antitrust legislation targeting Amazon and other big tech companies has languished for months in Congress as prospects for votes by the full Senate or House have dimmed.

Last month, Amy Klobuchar, the senator from Minnesota who heads the Senate antitrust panel, urged the Federal Trade Commission to investigate the One Medical acquisition, in the mold of other critics who have called on regulators to block the purchase over concerns about Amazon’s past conduct and potential implications for consumers’ health data. Regulators also have discretion to challenge Amazon’s $8.5bn buyout of Hollywood studio MGM, which was completed earlier this year.

Founded in 1990 by a trio of Massachusetts Institute of Technology roboticists, including Angle, iRobot’s early ventures led to rovers that could perform military and disaster-relief tasks in the aftermath of the 9/11 attacks.

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