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Amazon's iRobot acquisition raises concerns

Numerous organizations wrote to the Federal Trade Commission Friday, raising data privacy and competition concerns about Amazon's iRobot acquisition.

More than 20 civil rights and data privacy organizations sent a letter Friday to the Federal Trade Commission asking the agency to challenge Amazon's acquisition of iRobot, calling it a privacy and competition threat.

Amazon entered into a definitive merger agreement last month to acquire iRobot, maker of the popular Roomba vacuum cleaner. But privacy advocates worry that Amazon will use this product to vacuum up information about consumer homes and private lives.

"Allowing Amazon to absorb a competing smart home device business with access to incredibly detailed consumer data would endanger fair competition and open markets while also jeopardizing consumer privacy," according to the letter. The FTC is reportedly looking into Amazon's iRobot acquisition.

Acquiring iRobot could provide Amazon with a significant amount of consumer data, said Gartner analyst Bill Ray. Roomba vacuums provide details such as room layouts, the number of rooms in a house and furniture placement.

"The size of your rooms, the thickness of your carpet -- that sort of information is very useful," Ray said. "You can tell a lot about a person by that kind of thing."

Data privacy concerns with Amazon's iRobot acquisition

Amazon already knows a significant portion of its customers have more than one Alexa product, with the kitchen being the most popular location, Ray said.

With the acquisition of iRobot, its vacuum products could be used to glean information about a consumer home, including which rooms include Alexa products, he said. If a consumer only owns three Alexa devices but has five rooms, Amazon could set out to advertise additional Alexa products for those other rooms, Ray said.

"The question is, why have you not put Alexa in those other rooms?" Ray said. "Once Amazon discovers which rooms those are, what shape they are [and] what furniture is in them, then they can try and work out how they can make you own an Alexa that would work in that room."

In the letter to the FTC, data privacy organizations -- including Fight for the Future, Electronic Frontier Foundation and the Center on Privacy and Technology at Georgetown Law -- voiced concerns about the iRobot acquisition adding to Amazon's already-extensive data collection abilities.

"Linking iRobot devices to the already intrusive Amazon home system incentivizes more data collection from more connected home devices, potentially including private details about our habits and our health that would endanger human rights and safety," according to the letter.

Competition concerns

The privacy groups also see competition concerns, noting in the letter that Amazon "already dominates the smart home device market," with a quarter of U.S. households owning at least one Alexa-powered device.

Amazon's business model relies on acquiring rivals, said the privacy groups, and its acquisition of doorbell maker Ring in 2018 serves as a warning of what may happen.

In theory at least, it will make Amazon the most extensive and preferred option for smart home automation, taking it beyond Google.
Alan Pelz-SharpeFounder, Deep Analysis

"By 2021, Amazon Ring had crushed competing smart doorbell makers – selling as many units as its four closest competitors combined," according to the letter. "Amazon's success relied on selling low price Ring doorbells through its almost ubiquitous e-commerce platform, aided by integration with the company's subscription program, Amazon Prime."

Amazon's iRobot acquisition could follow a similar pattern, the privacy groups said.

While there are clear data privacy concerns stemming from the Amazon iRobot acquisition, proving an anticompetitive argument could be trickier, Ray said. If a company like Shark --which also makes robot vacuums -- acquired iRobot, he believes that's a definitive competition concern.

Amazon, however, isn't a market leader in vacuum robots, making it difficult to pinpoint the competition argument, he said.

"Obviously it makes iRobot a very serious competitor, and if I was making robot vacuum cleaners, I would be nervous," Ray said. "But that's not enough to trigger a competition investigation."

What Amazon is after with its iRobot acquisition

Ray said that subscription revenues are becoming increasingly important for companies needing long-term commitment and revenue, and Amazon could turn its iRobot acquisition into a subscription service.

"You could imagine paying for a Roomba on a subscription whereby spare parts are automatically sent to you, new brushes are automatically sent to you, and indeed the product itself would be cheap to make up for that," Ray said. "So I think they see that as going towards a subscription service."

iRobot is a natural extension to Amazon's existing home products, including Ring, Alexa and its general smart home ambitions, said Alan Pelz-Sharpe, founder of consulting firm Deep Analysis. Bringing in iRobot also adds a customer base of 30 million users, he said.

"In theory, at least, it will make Amazon the most extensive and preferred option for smart home automation, taking it beyond Google," Pelz-Sharpe said.

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.

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