iRobot, the tech firm making the iconic Roomba, announced on August 5, 2022, it wanted to sell itself to Amazon for $1.7 billion. Typically when mergers and acquisitions happen, companies can save money by cutting duplicative costs and innovate by sharing technology. 

Consumers can win as companies want to grow their market share by new sales, and with new resources and lower costs, firms can lower prices and improve quality.   

The deal was subject to U.S. federal approval from the U.S. Federal Trade Commission (FTC) led by Biden appointee Lina Khan. In June 2023, the UK’s Competition and Markets Authority approved the deal, but continental Europe proved hostile after the European Commission launched its formal investigation in July. 

This week, Amazon and iRobot canceled the deal due to the intransigence of EU antitrust regulators. As a result, iRobot, which is based in Massachusetts–home of Sen Elizabeth Warren, who opposed the deal–announced it would slash 350 jobs and CEO Colin Angle resigned. In a small consolation, Amazon will pay iRobot a $94 million breakup fee. The Wall Street Journal editorial page gives more context:

In July 2023 the European Commission opened its own investigation, focusing on dubious concerns that Amazon would favor iRobot over rivals. Yet the U.K.’s competition regulators cleared the deal last year and said Amazon wouldn’t have an incentive to undercut Roomba competitors.

European law prohibits tech platforms like Amazon from favoring their own products. Yet European regulators refused to consider possible concessions from Amazon to allay their concerns about “self-preferencing.” So Amazon and iRobot scrapped the deal.

“During our investigation, we have been in close contact with the US Federal Trade Commission,” European Commission Executive Vice-President Margrethe Vestager said Monday. She said its investigation found “Amazon would have had the incentive to foreclose iRobot’s rivals because it would have been economically profitable to do so.”

Europe’s theory of potential harm to competitors wouldn’t fly in U.S. federal court under the consumer welfare standard. Ms. Khan made similar arguments when she sued to block the Microsoft-Activision Blizzard and Meta-Within Unlimited deals. She lost both. Did Ms. Khan suggest that her European friends scuttle Amazon’s acquisition?

Sen. Warren and Ms. Khan have won a pyrrhic victory. iRobot said Monday it is cutting about 31% of its workforce and research and development spending by “offshoring of non-core engineering functions to lower-cost regions.” iRobot said it will also pause “all work related to non-floorcare innovations.”

It’s hard to see who benefits from the deal’s collapse besides Beijing, which aims to dominate robotics and mass-produce humanoid robots by 2025. The iRobot rivals progressives are worried about are Chinese firms.

According to Statista, iRobot’s global category share shrank from 64% in 2016 to 46% in 2020, while Ecovacs, a Chinese vacuum firm, increased its share from 7% in 2014 to 17% in 2020.

The origin story of iRobot is as American as apple pie, founded in 1990 by three members of MIT‘s Artificial Intelligence Lab. It seems like the Biden administration would prefer to cozy up with European regulators to ship jobs to China than allow American firms to thrive.

It’s no wonder then that FTC’s Khan–a mastermind behind the Biden administration’s anti-business, anti-growth regulatory schemes–is hobnobbing today in Brussels with European regulators at a not-subtly titled event called “Antitrust, Regulation and the Next World Order.”

Khan and her allies seek to impose “the Next World Order” as they see fit, rather than allowing companies to innovate higher quality products at lower prices for consumers. 

This is bound to fail, and Khan’s taking the wrong cues from our European friends. As Walter Russell Mead wisely put it: “Fifteen years after the financial crisis, meanwhile, tightly regulated Europe has fallen behind the U.S. Using chained 2015 dollars to minimize the effect of currency fluctuations, total European Union gross domestic product in 2008 was 81% that of the U.S. In 2022 it was 73%, hardly an argument for the European way.”

The Biden’ administration’s unprecedented assault on the U.S. consumer welfare standard–the powerful and long held idea that lower prices and higher quality for consumers is the gold standard to examine mergers and acquisitions–will only help China and other foreign countries. Americans deserve better.