The European Union’s antitrust regulators are set to block Amazon’s $1.7 billion acquisition of iRobot, the maker of Roomba robot vacuums, according to people familiar with the matter.
The decision, which could be announced as soon as this week, would be a major setback for the tech giant, which had been hoping to expand its footprint in the smart home appliance market.
EU regulators are concerned that the deal could stifle competition in the growing robot vacuum cleaner market. They worry that Amazon could use its dominance in online retail to give Roomba an unfair advantage over rivals.
For example, Amazon could promote Roomba products more prominently on its website or give them preferential placement in search results. This could make it more difficult for consumers to find and buy competing products.
Amazon has declined to comment on the EU investigation.
The news sent iRobot’s shares tumbling by 40% in after-hours trading. The company had seen its sales decline in recent years, and the acquisition by Amazon was seen to boost growth.
Critics of the EU’s decision say it would be bad for consumers. They argue that the deal would have led to lower prices and better products for consumers.
“If the goal is to have more competition in the home robotics sector, this doesn’t make sense,” said Matt Schruers, president of the Computer and Communications Industry Association.
“Blocking this deal could very well leave consumers with fewer options, and regulators can’t sweep that fact under the rug,” Schruers told Reuters.
The EU is expected to issue a final decision on the deal by February 14.
