iRobot's Avoidable Predicament: An Antitrust Enforcement Blunder

Lina Khan recently took to social media to claim false vindication for her attempt to block the Microsoft/Activision deal, but one wonders if she’ll acknowledge the strategic blunder of working to block the proposed Amazon/iRobot merger during her tenure as chair of the Biden administration’s FTC. With iRobot now on the ropes and nearing bankruptcy, it's worth reconsidering why the FTC was so “pleased” when the companies jointly abandoned the transaction in early 2024 after facing scrutiny from European regulators.

iRobot, initially a quintessential American success story, was founded by MIT roboticists in 1990. At first, its robots were used in scientific exploration, and its patrons included major research and government agencies such as NASA. It later expanded into consumer markets with the 2002 launch of the Roomba, its robot vacuum, designed to free up time consumers once spent on household chores. While the company’s revenue increased over the years, it began a sharp decline in 2020. Amid financial struggles, iRobot secured a bridge loan while it negotiated a buyout in August 2022 with Amazon, which offered $1.7 billion for the company.

The deal would likely have been procompetitive for several reasons. First and foremost, iRobot clearly needed a partner with the capabilities and risk tolerance to invest in an increasingly competitive and dynamic market. Big tech firms can provide smaller innovators with the resources required for enduring commercial success in such markets, and this merger could have supplied the long-term capital that iRobot needed to compete globally against rapidly growing rivals. A further potential benefit of the transaction was the elimination of double marginalization. Specifically, the acquisition could have allowed Amazon to lower prices for consumers when selling iRobot products on its retail platform by eliminating internal markups.

However, despite approval from the UK’s Competition and Markets Authority (CMA), which cited robust competition among robot vacuum makers, the acquisition faced scrutiny from European and American antitrust agencies—which, it appears, may have coordinated their investigations. As then-EU Competition Commissioner Margrethe Vestager noted in a statement released after the parties jointly abandoned the merger in January 2024, the EU authority had been “in close contact with the U.S. Federal Trade Commission” during its investigation. In a press release issued a few days later, the FTC signaled that it too would likely have attempted to block the deal due to “significant concerns about the transaction’s potential competitive effects.”

The consequences of the deal’s failure have been disastrous for iRobot. In the immediate aftermath, the company was forced to lay off nearly one-third of its employees, and its stock price continued to tumble dramatically. Between the end of 2023 and March 2025, iRobot laid off over half of its workforce and expressed “substantial doubt about the company’s ability to continue as a going concern” in one of its earnings reports. More recently, its search for another buyer has been unsuccessful, further accelerating the steep decline in its share price, which has fallen more than 50 percent this year.

To add insult to injury, the theories of harm considered by EU and U.S. enforcers were tenuous at best. Enforcers first objected that Amazon could potentially foreclose rival robot vacuum makers from selling on its marketplace. However, as noted previously by ITIF, Amazon would have little incentive to engage in such foreclosure given its broader goal of selling as many products as possible on its retail platform, and given the ability of third-party retailers to sell rival robot vacuums on Amazon’s marketplace. Indeed, with respect to Amazon's past acquisition of the home security company Ring, which the European Commission cited in Issue 2 of its 2024 Competition Merger Brief, a quick search on Amazon's website shows that other door cameras and competing home security products are still sold alongside Ring products. In short, there is no evidence of foreclosure.

Opponents of the deal, such as Elizabeth Warren, also worried that the transaction would preclude Amazon from becoming a new competitor in the robot vacuum market to compete with iRobot. However, there is scant evidence for this “reverse killer acquisition” theory. Not only does the argument now look absurd given iRobot’s failure to remain a financially viable competitor in the market, but it also ignores the fact that it was speculative at best to assume Amazon was a likely potential competitor. In fact, Amazon’s own consumer robot products have failed to gain traction, illustrating that it may be more effective to buy rather than build such assets. That is, mergers can facilitate quicker entry into a market where speed is essential and building capabilities internally would be less efficient.

Moreover, the robotics industry isn't just another tech sector—it's a critical foundation for the next industrial revolution. Covering areas like manufacturing, logistics, healthcare, and defense, robotics serves as an essential dual-use technology vital to both national security and economic competitiveness. China clearly understands this, having positioned itself as the world's largest consumer of industrial robots, accounting for 52 percent of global installations in 2022. Chinese robotics companies enjoy massive government support, Guangdong province alone has invested approximately $135 billion in machine substitution, while China's robotics hubs receive 20 to 40 times more funding than their U.S. counterparts.

As such, the Amazon/iRobot deal isn’t just an example of antitrust analysis failing to take a sufficiently dynamic approach in innovation-heavy industries. In robotics, scale isn't about dominating markets—it's about survival against Chinese state-backed rivals. In this context, the iRobot case is especially concerning: Yet another American tech pioneer has lost substantial ground to heavily subsidized Chinese rivals such as Ecovacs and Roborock, which are vying for global robotics dominance. At bottom, rather than take pride in its homegrown innovators that create enormous value across the globe, the United States has followed the lead of other jurisdictions, like the EU, in trying to bring them down.

The Amazon-iRobot failure is more than antitrust gone awry—it's a warning about America's approach to strategic competition. We've damaged an important robotics company, weakened our competitive position in a critical technology, and ironically reduced market competition as Chinese firms rush to fill the gap. Antitrust authorities must understand that technology, industry, and competition policies interact and affect one another. Taking a “big is bad” anti-tech enforcement approach will ultimately weaken U.S. techno-economic competitiveness against China.