The highly anticipated $1.4 billion acquisition deal between Amazon and iRobot has been called off due to concerns raised by regulators in the European Union (EU) and the United States. The deal, which was first announced in August 2022, had initially received approval from regulators in the UK. However, the European Commission expressed concerns in November that the merger would give Amazon an unfair advantage over its competitors by allowing the online retailer to prioritize iRobot's products on its website.

On Monday, Amazon confirmed that the deal had collapsed after failing to find a way forward with EU officials during talks. The merger had also been facing scrutiny from regulators in the US, with the Federal Trade Commission reportedly poised to reject the deal. Amazon's senior vice president, David Zapolsky, expressed disappointment over the outcome, stating that the merger would have brought faster innovation and more competitive prices to consumers.

The collapse of the deal is a major setback for iRobot, best known for its Roomba range of circular vacuum cleaners. In response, the company announced a restructuring plan that includes laying off 31% of its staff and the resignation of founder Colin Angle as CEO. The company's interim CEO, Glen Weinstein, will lead iRobot during this transition period. Despite the failed merger, Amazon will still pay iRobot a previously agreed-upon termination fee of $94 million.

The UK's Competition and Markets Authority had previously approved the deal, citing the small market for robot vacuum cleaners in the country. However, they also acknowledged that Amazon had the ability to harm iRobot's rivals on its website but did not have the incentive to do so.

Shares of iRobot were down approximately 9% following the announcement, while Amazon's stock saw a slight increase of 0.5%. The two companies released a joint statement, with iRobot promising to provide more information on its future business plans during its fourth-quarter earnings call in February.

The European Commission released a statement supporting the decision to call off the acquisition, stating that it aligned with their findings that the sale would have posed a risk to iRobot's competitors. The deal had faced intense scrutiny from regulators, with concerns raised about potential anti-competitive practices and the concentration of power in the robotics market.

The collapse of the deal highlights the challenges faced by companies seeking to expand through mergers and acquisitions in the fast-moving technology sector. It also raises questions about the regulatory environment and the need for oversight to ensure fair competition in the global marketplace.