This isn't a too big to fail situation. Amazon wanted to buy iRobot. iRobot wanted the acquisition to go through. The government stepped in and blocked the acquisition on the grounds that they'd rather Amazon and iRobot remained competitors.

But what actually happens now is that iRobot lays off its core staff in a desperate attempt to avoid insolvency. The regulators could wish all they want that iRoomba stay a competitive player in this space, but businesses don't run on wishes and rainbows.