Why Amazon Really Paid $1.7B for iRobot
Amazon wants to buy iRobot, maker of Roomba, the robot vacuum. Are they really getting into the cleaning business, or is there another reason for the deal?
If a stranger knocked on your door and asked to take a video of your home’s floor plan and contents, you’d shut the door in their face, right? But what if that stranger added that you’d never have to clean your floors again? Would it change your mind?
For millions of Roomba users, the answer is “yes.”
Somewhere between the flip phone and the iPhone, the convenience of a portable pocket computer began to outweigh the privacy intrusion of being tracked everywhere we go. Now it’s hard to find someone who doesn’t own a smartphone. Tech behemoth Amazon figured out early on that convincing people to trade privacy for convenience was a smart bet. Their latest move is another example of that bet paying off.
Amazon and iRobot, the maker of Roomba, announced last week that Amazon offered to acquire iRobot. Does Amazon simply see an opening in the robot cleaning space? Their personal robot, Astro, has been slow to take off, even with the catchy name from The Jetsons.
Or is there more to the deal?
The Amazon/iRobot Deal
First, the facts: Amazon wants to buy the recently-struggling robot-vacuum company for $1.7 billion. It’s an all-cash deal, with Amazon offering $61 a share to iRobot shareholders.
Shareholders must agree to the deal, and the Federal Trade Commission (FTC) needs to sign off as well. If regulators or shareholders don’t approve the acquisition, Amazon must pay a $94 million termination fee to iRobot, according to iRobot’s SEC filing.
The parties have one year from the Aug. 4 filing date to complete the deal, with extensions possible.
What the Deal Really Means
That’s a lot of maps. And if the deal goes through, Amazon will be sitting on this huge trove of info about iRobot’s customers.
What will they do with it? Things become clearer when you recall what iRobot CEO Colin Angle told Reuters five years ago: “There’s an entire ecosystem of things and services that the smart home can deliver once you have a rich map of the home that the user has allowed to be shared.”
If that sounds to you like the whole idea is to sell you things, you’re not alone. Privacy advocates are wary.
“People tend to think of Amazon as an online seller company, but really Amazon is a surveillance company,” Evan Greer, director of Fight for the Future, a digital privacy rights organization, told Wired.
Data is big business, and Amazon already collects a ton of it. Amazon knows names, addresses, recordings from Alexa, orders you place, where they go, what you eat, what movies you buy and what websites you visit. Over time, their algorithm tailors products and experiences to you with pinpoint accuracy.
The acquisition of iRobot gives the data-gathering giant another large slice of the consumer data pie.
The Evolution of The Internet of Things
Short of living off the grid, we can’t get away from smart and interconnected devices. The number of devices capable of connecting to each other over the internet, collectively known as the internet of things, is expected to top 14 billion in 2022.
And it’s not just our data that’s at risk. A student at Florida Tech discovered a flaw in multiple doorbell cameras that allowed users with revoked access to remain logged in. For victims of domestic violence or stalking, that vulnerability could be dangerous.
What can homeowners do? Research, research, research. Utilize the expertise of scientists like those at Georgia Institute of Technology’s Astrolavos Lab. They tested more than 50 popular smart devices, from Ring doorbells to Echo voice assistants, and graded them in four security categories: Device, Mobile, Cloud and Network.