Amazon buys Roomba … and people are freaking out

8 August 2022 (Mykonos, Greece) – Amazon bought iRobot, maker of the Roomba robot vacuum cleaners, for about $1.7 billion. 

As we have noted in a series of posts, Amazon has been building a smart home business for quite a long time, centred on Alexa on one side and Ring on the other, and you can construct an elaborate theory that this is around data collection, understanding your home and your purchasing, listening to your conversations, and perhaps unlocking the door and tracking deliveries. As Jeff Bezos has said numerous times, Amazon succeeds because it buys its way to dominance. Not sure he’d make a great witness in an antitrust case against Amazon.

And, yes, a Roomba has a map of your home (actually just the bottom 2 inches of it), and you can construct all sort of hilariously paranoid fantasies around that as well (see below).

But I suspect Amazon just thinks that this is (a) a good market, (b) potentially an important end-point and touch point, and it wants to be there and to be sure Apple/Google don’t lock it out (which is also part of the reason Meta is doing VR), and (c) option value for the future. 

Meanwhile, given that the FTC just sued to try to stop Meta buying Within, a small VR fitness app, I would be astonished if it does not try to stop this deal, which is a much more obviously real part of a much more obviously real market.

But scanning social media you’ll find “it may be the most dangerous, threatening acquisition in the company’s history” 😱

A few comments pulled from the firehose:

1. The first thing about this deal is that Roombas are very popular. There are more than 40 million of the robots in peoples’ homes.  For many, they’ve become an omnipresent and seemingly permanent part of our lives. No one wants to go back to pushing a vacuum around.

2. Amazon’s interest in buying a popular product like Roomba is obvious. But with its acquisition of iRobot, Amazon would get so much more: A rival product, a vast dataset, and a new way into people’s homes and lives.

3. First, this deal is bad even if you’re only worried about whether the deal will hurt competition. Amazon’s own devices, including Astro robot and its Echo devices, do much of what the iRobot operating system does. This deal will take its biggest rival out of the market.

4. “Jeff Bezos buys his way to dominance” [note to my readers:I know; see above]. By snatching up Roomba and pairing it with its vast monopoly power fueled by its Prime system, it would do just that. There may be other smart vacuums today, but there won’t be once Amazon owns Roomba.

5. How does Amazon use Roomba to win the home robot market? It uses the same predatory pricing scheme on Roomba that it uses to sell Echo, Kindle and so on. It can predatorily price its competition out of the market, gaining a monopoly in the process. It’s the Amazon way.

6. This is also a straight-up data acquisition. The most advanced versions of Roomba collect information about your house as they clean.  It knows where you keep your furniture, the size of each room and so on. It’s a vacuum and a mapping device.

7. This would allow Amazon, the company that wants to know everything about American consumers – where we live, how we shop, what we eat, on and on – to buy out a company with perhaps the most data on the size, shape and layout of the inside of our homes.

8. From a privacy perspective, this is a nightmare. From an antitrust perspective, this is one of the most powerful data collection companies on earth acquiring another vast and intrusive set of data. This is how privacy concerns and antitrust go hand in hand.  When the company that has its cameras and microphones in your speakers, your doorbell, your security cameras tries to buy the company that knows the shape and contents of your home, it’s bad in all the ways.

9. If the regulatory agencies believe this is a vertical merger [note to my readers: there are anticompetitive horizontal elements here, too, actually] they should challenge it as such, even if the case law is bad and winning would be hard. [note to my readers: as I said, I would be astonished if the FTC does not try to stop this deal]