Shares in iRobot Corp. dropped over 30% in late trading today after a report from the Wall Street Journal said the European Commission intends to block the $1.7 billion takeover of the company by Amazon.com Inc.

The report, citing people familiar with the matter, claims that officials from the EC met on Thursday with representatives from Amazon to discuss the deal. During the meeting, Amazon was allegedly told that the deal would likely be rejected. Neither the EC nor Amazon has commented on the report at the time of writing.

Amazon announced its intent to acquire iRobot in August 2022. Along with its Roomba line of robotic vacuum cleaners, the company also offers educational robots that are used to teach programming skills, a line of handheld vacuums and air purifiers. When the deal was announced, it was as pitched as enhancing Amazon’s broader smart home portfolio, which includes products such as thermostats and doorbells.

A significant acquisition draws regulatory scrutiny and the first to investigate the deal was the U.S. Federal Trade Commission in September 2022. The European Commission later launched its own investigation into the deal in July last year after having undertaken a preliminary investigation in June.

The preliminary investigation found that along with Amazon being an important channel to sell robotic vacuum cleaners, the e-commerce giant may be able to foreclose on iRobot’s rivals by preventing them from selling on its online marketplace or by degrading their access through several strategies.

The preliminary investigation also found that Amazon may favor iRobot products in the Amazon marketplace, preventing competitors from sourcing certain advertising services or raising the cost of iRobot’s rivals to advertise and sell their products on the Amazon marketplace. “Such foreclosure strategies could restrict competition in the market for the manufacturing and supply of RVCs, leading to higher prices, lower quality and less innovation for consumers,” the commission said in the preliminary report.

When the full investigation was announced, the EC said it was concerned that the transaction would allow Amazon to restrict competition for robot vacuum cleaners and strengthen its position as an online marketplace provider. Seven months later, presuming the Wall Street Journal report is true, it has found that their antitrust concerns are well founded, enough to block the deal.

However, the finding isn’t official until it’s announced. According to CNBC, the EC is expected to rule on the deal officially by Feb. 14.

Photo: iRobot