On July 6, the European Commission issued a press release announcing the start of an investigation into the proposed deal between retail giant Amazon and home robotics company iRobot. The Commission has expressed initial concerns about potential anti-competitive effects resulting from the transaction.
"We believe Amazon can offer a company like iRobot the resources to accelerate innovation and invest in critical features while lowering prices for consumers," an Amazon spokesperson told TechCrunch.
According to a press release issued on July 6, The investigation centers around two key areas of concern identified by the Commission. Firstly, the deal could give Amazon the ability to impede competition in the market for the manufacturing and supply of robot vacuum cleaners (RVCs). Additionally, the Commission raises concerns about Amazon's strengthening position in the online marketplace services for third-party sellers, including advertising services, as well as other data-related markets.
Notably, the Commission's preliminary findings reveal that Amazon's online marketplace plays a vital role in the sale of RVCs in various European Union member states. Amazon may employ strategies to hinder iRobot's competitors, such as favoring iRobot's products in search results and advertising placements, limiting advertising services available to iRobot's rivals, and increasing costs for their participation in Amazon's marketplace. These potential foreclosure strategies have the potential to restrict competition in the manufacturing and supply of RVCs, potentially leading to adverse effects for consumers, such as higher prices, reduced product quality, and less innovation.
Furthermore, the Commission highlights concerns over Amazon's control of access to its Alexa software and the "Works with Alexa" (WWA) certification. Interoperability with Alexa and obtaining the WWA certification are considered significant selling points for RVC manufacturers and suppliers to remain competitive. The investigation questions whether Amazon may hinder access to these features, potentially impeding rivals' ability to compete effectively.
In addition to the competitive concerns, the Commission also raises apprehensions about the data Amazon would gain access to through the deal. This includes information provided by iRobot's RVC users, data collected by iRobot's devices, and data obtained from third parties. The Commission suggests that this data could provide Amazon with a considerable advantage in the market for online marketplace services and related advertising. By leveraging iRobot's data, Amazon may have the ability to enhance the ranking and personalization of organic search results and advertisements on its platform, potentially creating barriers for rival marketplace providers and undermining competition.
An Amazon spokesperson emphasized their commitment to working with the European Commission and addressing any concerns raised during the process. "We continue to work through the process with the European Commission and are focused on addressing its questions and any identified concerns at this stage," an Amazon spokesperson told CNBC.
"We continue to work through the process with the European Commission and are focused on addressing its questions and any identified concerns at this stage. iRobot, which faces intense competition from other vacuum cleaner suppliers, offers practical and inventive products. We believe Amazon can offer a company like iRobot the resources to accelerate innovation and invest in critical features while lowering prices for consumers," Amazon said in a statement to TechCrunch.
The European Commission now has 90 working days, until 15 November 2023, to reach a decision on the matter.
