Amazon and iRobot have abandoned their $1.7 billion acquisition deal, citing insurmountable regulatory challenges. The dissolution of the deal prompted iRobot to announce a substantial layoff of 31% of its workforce, and the resignation of founder Colin Angle as CEO.

Glen Weinstein will serve as interim CEO. iRobot’s shares experienced a nearly 9% decline following the news, while Amazon, up around 0.5% in noon trading, will pay a $94 million cancellation fee. The restructuring plan by iRobot aims to save up to $150 million, affecting around 350 employees.

The decision was influenced by the European Commission’s concerns about potential competition risks in the robot vacuum sector. The deal, first revealed in August 2022, faced regulatory scrutiny from both domestic and international bodies.

The Federal Trade Commission (FTC) had initially posed a challenge, but the ultimate roadblock came from the European Union, with “no path to regulatory approval.” The European Commission had indicated that the acquisition could hinder competition. The EU’s regulatory decision was expected by February 14th, but the companies decided to call off the deal before the final date.

Regulatory investigations into the deal were driven by concerns that Amazon could exploit its monopoly power in the digital economy. Critics suggested that Amazon might sell Roombas at a loss or bundle them with its Prime subscription, potentially sidelining other smart vacuum makers.

Additionally, the acquisition could grant Amazon access to detailed consumer data related to home layouts and lifestyles, raising privacy concerns. The failed deal reflects a changing regulatory landscape, with increased scrutiny on big tech monopolies, led by FTC Chair Lina Khan.

Other tech giants, including Adobe, Nvidia, Meta, and Microsoft, have also encountered regulatory hurdles in Europe.