“The company’s purchase of iRobot, the maker of the Roomba, likely has little to do with cleaning floors.
“Earlier this month, Amazon announced that it was buying the Roomba vacuum maker iRobot. On the surface, this move looks like a massive online retail marketplace acquiring a popular gadget to sell to its loyal shoppers. Roomba is a sparkling consumer product, and iRobot has sold 40 million of them over the past two decades. Shoppers today find them occupying end caps at big retailers such as Costco and Target. The device’s smooth, spinning design has given it a huge chunk of the $3 billion-a-year robot-vacuum market; three quarters of all smart vacuums sold in America bear the Roomba name. In that way, the deal makes sense.
Amazon’s monopoly power looks like this: Sales on Amazon account for at least half of all online commerce in the U.S. Three out of every four product searches begin on the site. Amazon’s shipping and warehousing service delivers about a quarter of all e-commerce packages in America and is on pace to overtake UPS as the second-largest consumer package-delivery company after the U.S. Postal Service.
Amazon Web Services is by far the largest cloud-computing company in the country. Amazon Echo accounts for two-thirds of all smart speakers. This is by no means a complete accounting.
The iRobot deal follows a known Amazon strategy, one that Jeff Bezos has admitted to in the past: using mergers to buy its way to dominance. . … (By simply taking over the company that makes the most popular product in the industry, Amazon can grow its monopoly without actually having to out-innovate and out-compete its rivals.
Amazon can then use its gatekeeper power by pairing Roomba with its monopoly online marketplace and Prime subscription program, leaving other vacuum brands to wither and atrophy, unable to gain the attention and prominence held by Roomba on the country’s most popular shopping site.
Amazon has used a range of anti-competitive tactics to secure a commanding position across a variety of home-tech products, all designed to further its dominance of the smart home. The company often sells its Echo smart speakers at a loss, mirroring the predatory pricing strategy it used to sell diapers, its Kindle, and even its Prime Video service in order to drive out rivals and expand its primacy. Amazon might very well employ the same strategy with Roomba. Combine its monopoly retail power with below-cost pricing, and the deal becomes a competition killer.
This merger isn’t just about controlling the robot-vacuum industry, or even about smart-home devices. Owning Roomba would give the world’s most dominant spy-tech maker yet another portal into our homes and lives. It could map where we live, what we own, and what it should be selling to its hundreds of millions of captured customers.
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