1. Hello. Amazon today announced it would pay $1.7 billion to acquire iRobot, the company behind the Roomba robotic vacuum. It may be the most dangerous, threatening acquisition in the company’s history. A thread.
2. 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!
3. 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.
4. 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.
5. Jeff Bezos has said that Amazon wants to buy its way to dominance. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. Last thing: If the agencies believe this is a vertical merger – and as I said, I think there are key, anticompetitive horizontal elements here too – they should challenge it as such, even if the case law is bad and winning would be hard. /end