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The stock of Roomba parent iRobot Corp. fell 9% Thursday in heavy volume, amid concerns the Federal Trade Commission’s suit against Amazon.com Inc. may derail their planned deal.
Amazon
AMZN,
announced plans to acquire iRobot
IRBT,
in August of 2022 in a $1.7 billion all-cash deal including debt. But the deal immediately garnered interest from regulators concerned it would allow the e-commerce giant to literally vacuum up more personal information on customers, as Robert Weissman, president of consumer advocacy organization Public Citizen, told MarketWatch at that time.
For more, see: Amazon’s $1.7 billion purchase of Roomba maker iRobot sparks privacy fears: ‘Homes were your last data sanctuary’
Last week, iRobot’s stock rallied after the U.K. regulator opted to approve the deal. The U.K. Competition and Markets Authority had launched an investigation of the takeover in April, but concluded it would not stifle competition in its home market.
In the U.S., however, the deal is still being scrutinized by the FTC, which launched its review last September with requests for information from both companies.
On Wednesday, the FTC sued Amazon and alleged the company “duped” millions of consumers into enrolling in Amazon Prime subscriptions without their consent.
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said in a statement.
The FTC said in its complaint, filed with the U.S. District Court for the Western District of Washington, that Amazon also knowingly made the cancellation process complicated in an attempt to stop customers from dropping their Prime subscriptions.
“Amazon used manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions,” the FTC said in its complaint.
See also: How hard has it been to cancel Amazon Prime? Start by navigating 4 pages, 6 clicks and 15 options.
An Amazon Prime subscription costs $14.99 a month, or $139 a year.
“The FTC’s claims are false on the facts and the law,” Amazon said in an emailed statement to MarketWatch. “The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership.”
The complaint announced Wednesday comes less than a month after the FTC and the U.S. Department of Justice charged Amazon for violation of child-privacy laws by keeping recordings of children on Amazon’s Alexa voice-assistant service forever and for undermining deletion requests.
Amazon has in the past asked that FTC Chair Khan recuse herself from matters involving the company. That’s because in a 2017 Yale Law Review article, Khan said Amazon has such a dominant role in the internet economy and should come under greater regulatory scrutiny.
Read more: The wrath of Khan? New FTC chair is Big Tech’s biggest nightmare
The article was headlined, “Amazon’s Antitrust Paradox.”
Amazon may be facing yet another regulatory hurdle, according to Reuters. The news agency reported Thursday that the European Union is also planning a full antitrust investigation of the iRobot deal, citing people familiar with the matter.
iRobot stock has fallen 6% in the year to date, while the S&P 500
SPX,
has gained 14%.
