NEW YORK — Amazon on Friday announced it has agreed to acquire the vacuum cleaner maker iRobot for approximately $1.7 billion, scooping up another company to add to its collection of smart home appliances amid broader concerns about its market power.
iRobot has a wide range of products and sells them worldwide. The most popular product is the Roomba-shaped vacuum. This will join the Ring security cameras, Alexa voice assistant, and Astro robot in the smart home offerings offered by the tech company based out of Seattle.
The move 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. A slew of home-cleaning robots adds to the company’s tech arsenal, making it more involved in consumer’s lives beyond static things like voice control.
Amazon’s Astro robot, which helps with tasks like setting an alarm, was unveiled last year at an introductory price of $1,000. However, its widespread rollout was limited and received little response.
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Amazon hasn’t had much success with household robots, but the iRobot acquisition 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.
Friday saw iRobot report its quarterly results. Due to orders reductions and delays the main reason for revenue plunge, iRobot announced on Friday that 10% of its employees would be laid off.
Amazon said it will acquire iRobot for $61 per share in an all-cash transaction that will include iRobot’s net debt. According to July 2, the total company debt stood at $332.1 million. Shareholders and regulators must approve the deal. 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.
iRobot shares climbed 19% during midday trades. Amazon’s were down 1.4%.
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The deal comes as anti-monopoly advocates continue to raise concerns about Amazon’s increasing dominance. The purchase of iRobot is Amazon’s fourth-largest acquisition, led by its $13.7 billion deal to buy Whole Foods in 2017. Amazon announced that it was buying One Medical as a primary care provider, in an agreement valued at approximately $3.9billion. It is a significant move to expand its health care reach.
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 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.”
As the prospects of getting votes from either the House or full Senate on landmark antitrust legislation against Amazon and other Big Tech firms have diminished, Congress has been stuck with this bill for several months.
Last month, Sen. Amy Klobuchar, D-Minn., who heads the Senate Judiciary antitrust panel, urged the the Federal Trade Commission to investigate the One Medical acquisition, in the mold of other critics who’ve 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 $8.5 billion 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 Sept. 11 attacks.
iRobot’s profits from defense contracts enabled it to test a range of robots. Some duds were produced, but one great commercial success was the Roomba. This Roomba was introduced in 2002 and established the vacuum cleaning market.
In 2016, the company disbanded its defense robots division to focus almost entirely on selling vacuums and other home robotics such as Braava’s robotic mop. In 2020, it planned to introduce a robotic mower to its lawn. However, the company retracted due to problems related to the pandemic.
Tech writer for AP Matt O’BrienProvidence, Rhode Island, contributed to this report.
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