Amazon’s Robotics Shopping Spree Continues with iRobot Acquisition

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3Q 2022 | IN-6648

Amazon’s planned acquisition of iRobot seemingly follows the recipe of how big actors behave in a market-based economy: buying out smaller players to achieve market dominance, in this case in the smart home sector, which Amazon has invested in significantly recently. In addition, iRobot’s smart vacuum cleaners, equipped with sensors that can scan and map entire floors, offer what big tech truly values: consumer data. But with brings up privacy and regulatory concerns, and a potential pushback.

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Another Routine Amazon Acquisition in a Market-Based Economy?


Amazon’s recent announcement that it has agreed to a merger with iRobot for US$1.7 billion, pending approval by the Federal Trade Commission (FTC), would appear to follow the logic of market-based economies. Indeed, in recent years, Amazon has acquired various companies with the apparent goal of becoming a dominant robotics vendor. Starting with Kiva Systems, an Automated Guided Vehicle (AGV) vendor in 2012, the company has since acquired Dispatch, an outdoor delivery robot startup, and Canvas Technology, a warehousing Autonomous Mobile Robot (AMR) vendor, in 2019, as well as Zoox, an autonomous vehicle solution provider in 2020.

Now it is iRobot’s turn, with its smart vacuum cleaners—another piece in the autonomous machine product portfolio that Amazon is creating. Even the timing of the announcement aligns with this market-based perspective: iRobot was valued at US$2.5 billion a year ago and, in the last quarters, reported reduced revenue, with its own strategy of acquiring smaller companies to expand its operations having faltered in recent years, while Roomba, iRobot’s flagship smart vacuum, is seemingly the perfect complement for Amazon’s Astro, a home monitoring and security robot launched in 2021.

Amazon's Real Target Is Probably Obtaining More Customer Data


Amazon and most other big tech vendors have always operated in a buy-to-expand fashion, with market dominance firmly in sight and the issue of innovating partly complementary, partly additive. As for the status of iRobot in the market, the company was founded some 30 years, having started as a maker of robots for the military thanks to a Defense Advanced Research Projects Agency (DARPA) grant, as so many projects from Massachusetts Institute of Technology’s (MIT) laboratories start off, only selling off its military wing in 2016 to concentrate on the smart home sector. iRobot’s position in this sector is a dominant one in the United States. The company has sold some 40 million units in the 2 decades since it has focused on the smart home sector and accounts for the majority of smart vacuums sold in the United States.

Therefore, the planned merger is not simply a case of Amazon acquiring a smaller company to implement technology that it has not been able to develop itself; it is also not simply a case of iRobot not having been able to expand beyond its prima facie niche of smart vacuum technology. What iRobot offers Amazon, since the release of its new Operating System (OS), iRobot OS, is the capability of mapping floor plans through the sensors with which Roomba is equipped. Smart map technology includes scanning the contents of the floors, giving iRobot a deeper understanding of users’ households and their habits, in addition to voice commands and better object identification. Considering, first of all, the potential usefulness of such data for a company like Amazon, which has historically been all too keen to amass extensive information about users, often with little oversight, and the stated willingness of iRobot to sell the data its smart vacuums can now gather to the highest bidder, the merger appears to be a match made in heaven.

A Blueprint and (Potentially) Cautionary Tale for Peers and Rivals


What Amazon has achieved in robotics remains market leading. The company has launched its own warehousing AGV, AMR, last-mile delivery robot, indoor security drone, and companion robot in the span of a decade, laying a solid foundation for the company to flourish as a technology behemoth in both hardware and software. This is a good playbook for Asian big tech vendors, such as Alibaba, Samsung, and Xiaomi, which are actively expanding their presence and influence in the robotics market.

At the same time, ABI Research advises caution regarding this merger for various reasons. Regulatory bodies are increasingly keen to enforce data privacy breaches, partly as a reflection of what users, and citizens in general, wish to see happen, so market players will need to reflect these concerns in their operations now and in the near future. Amazon’s strategy of amassing vast tracts of personal data may not be a winning formula in the long term; not only are these practices often regarded as morally suspect by users, potentially denting consumer confidence, they also often go against both the spirit and the letter of data protection legislation. The FTC is going where users are already, and the double-barreled constraint of respecting users’ private data and avoiding antitrust and anticompetitive practices is the kind of reality that market vendors need to be acquainted with. Even if the FTC does not seek to block the Amazon-iRobot merger, or if it does not succeed in doing so—the FTC sued last month to have Meta’s acquisition of Within blocked, for instance—the agency’s stand certainly presents a brave new world for big tech.