Cleaning up? The effect of quality contribution in Amazon’s attempted iRobot acquisition

Amazon’s proposed acquisition of iRobot is analysed using an intuitive model of platform-driven quality allocation, demonstrating that platform ownership can amplify quality asymmetries, especially after acquiring a high-quality seller. Structural estimates based on United States (US) robotic vacuum data show that even modest, algorithmically driven increases in iRobot’s ratings can substantially increase both firm and platform profits and shift market shares. The baseline framework isolates this demand-side channel by abstracting from direct reputation or governance costs of platform intervention. We then incorporate these reputational costs into a counterfactual analysis and show that they can constrain the extent of platform intervention. Taken together, the results indicate that platform-controlled quality signals can influence competitive outcomes when interventions are not overly limited by potential reputational losses. Merger policy should therefore consider such non-price mechanisms in digital markets alongside an assessment of potential reputational effects on the platform.