(CNN) — Amazon and iRobot, the maker of the popular Roomba vacuum, mutually called off their estimated $1.7 billion acquisition deal Monday, citing numerous regulatory hurdles.

Immediately after the deal was publicly squashed, iRobot announced it would lay off 31% of its staff and that founder Colin Angle would step down from his role as CEO, citing a focus on profitability, stability and growth. Glen Weinstein will serve as interim CEO.

Shares of iRobot (IRBT) were down around 9% in noon trading following the news. Amazon (AMZN), which was up about 0.5% in noon trading, will pay iRobot a previously agreed-upon $94 million cancellation fee.

IRobot said the restructuring plan, impacting around 350 employees, is intended to save the company up to $150 million. The two companies outlined the news in a statement, with iRobot promising additional information on its future business plans at its fourth-quarter earnings call in February.

“Though decisions that impact our people are difficult, we must move forward with a more sustainable business model, and a renewed focus on profitability,” Andrew Miller, iRobot’s new chairman of the board, said in the statement.

The European Commission released a statement after news of the acquisition’s demise, saying the decision was in line with their findings that the sale would have put iRobot’s competitors at risk.

A troubled plan

First announced in August 2022, Amazon’s quest to purchase iRobot had the potential to expand the company’s existing robotics lineup (Amazon introduced home monitoring robot Astro in 2021) and deepen its presence in consumer homes.

But the deal has faced intense scrutiny from regulators at home and abroad.

While it once appeared that the Federal Trade Commission would pose the largest threat to the acquisition, the companies said Friday that the merger’s demise is ultimately due to there being “no path to regulatory approval” in the European Union.

In November, the European Commission said the deal could hamper competition in the robot vacuum sector. A provisional deadline for an EU decision was set for February 14th, though the companies backed down before reaching the final date.

Earlier this month, the Wall Street Journal reported that the European Commission planned to block the deal.

“Mergers and acquisitions like this help companies like iRobot better compete in the global marketplace, particularly against companies, and from countries, that aren’t subject to the same regulatory requirements in fast-moving technology segments like robotics,” David Zapolsky, Amazon senior vice president and general counsel, said in the statement.

Regulators begin probes

The Federal Trade Commission looked deeper into the deal last September, probing for more information after more than two dozen groups wrote to the agency alleging the deal could help Amazon “entrench their monopoly power in the digital economy.”

For starters, they argued, Amazon could seek to sell Roombas at a loss or in connection with its Prime subscription service and potentially drive other smart vacuum makers out of business.

They also asserted that Amazon’s control of Roombas could give it access to detailed data about consumers’ home layouts, interiors and lifestyles that could benefit its e-commerce business at the expense of rivals that do not have access to that trove of data.

Shortly after, the FTC and 17 state attorneys general sued Amazon for illegally maintain monopoly power, a case which the company sought to dismiss in December.

While Amazon has sometimes been able to overcome regulatory scrutiny — like when it purchased home security company Ring in 2018 — a new climate has emerged, spearheaded by FTC Chair Lina Khan, who vocally opposes big tech monopolies.

Last week, the Commission announced an inquiry into into AI partnerships and investments at several companies including Amazon.

Tech faces headwinds in Europe

Other mega tech companies have faced similar merger hurdles in Europe.

Adobe abandoned its deal to buy Figma in December, citing “no clear path” to getting approval in the EU and UK. Nvidia walked away from plans to buy Arm last February due to “significant regulatory challenges” and Meta sold off GIF library Giphy to Shutterstock at a nearly $350 million loss due to a ruling from UK’s Competition and Markets Authority (CMA) last May.

Microsoft’s purchase of Activision Blizzard only achieved regulatory approval after making concessions to the CMA.

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