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Amid Amazon’s recent decision to cancel its proposed acquisition of iRobot, concerns are mounting among European startups regarding the implications of heightened regulatory scrutiny on future deals involving tech giants.

In a recent opinion piece for the Financial Times (FT), Javier Espinoza highlights the apprehension among entrepreneurs, who fear that the failure of one of the world’s largest companies to acquire the Roomba maker may signal a chilling effect on acquisitions by other Big Tech firms.

As reported by PYMNTS, Amazon withdrew its $1.7 billion bid for iRobot in January, citing insurmountable regulatory obstacles in the European Union.

David Zapolsky, Amazon’s Senior Vice President and General Counsel, expressed disappointment over the cancellation, attributing it to what he deemed “undue and disproportionate regulatory hurdles.”

Following the collapse of the deal, iRobot initiated a restructuring process, resulting in a workforce reduction of 31%. CEO and Chairman Colin Angle also announced his resignation.

Stefan Moritz, Secretary-General of the lobbying group European Entrepreneurs, voiced concerns over the EU’s intervention in the iRobot acquisition, warning of potential ramifications on entrepreneurial activity. He cautioned that excessive regulatory scrutiny could discourage entrepreneurship and lead to the closure or acquisition of many startups.

Olivier Guersent, Director-General of the EU’s competition unit, elaborated on the regulator’s concerns regarding the iRobot deal, citing apprehensions about Amazon’s potential dominance in the market for robotic vacuum cleaners.

“We think we had a very good case for this,” Guersent remarked at an antitrust conference in Brussels, highlighting the substantial evidence supporting the regulatory scrutiny. He suggested that Amazon’s decision to abandon the acquisition might have been influenced by the strength of the case against it.

The report underscores the historical reliance of European startups on Big Tech companies to fuel their growth, citing past acquisitions such as Microsoft’s purchase of Skype for $8.5 billion and Apple’s acquisition of music-recognition app Shazam for $400 million.

These developments come amidst a downturn in tech startup funding across Europe, with a report from British venture capital firm Atomico projecting a decrease in funds raised by tech startups to approximately $45 billion in the past year, down from $82 billion in 2022. The decline is attributed to delays in fundraising by later-stage companies and reduced investor deployment, particularly affecting late-stage investment rounds.