Britain’s competition regulator has officially designated Google as having “strategic market status” in the United kingdom’s search and search advertising markets, a move that subjects the tech giant to a new level of scrutiny and potential intervention. The Competition and Markets Authority’s (CMA) decision, announced on Friday, is the first of its kind under the UK’s new digital competition regime, which came into effect at the beginning of the year. This designation empowers the watchdog to impose new rules on Google’s business practices to foster a more competitive landscape.
The “strategic market status” (SMS) designation is a direct result of the CMA’s finding that Google possesses “substantial and entrenched market power” in the UK’s general search and search advertising sectors. The regulator highlighted that over 90% of searches in the UK are conducted on Google’s platform, giving the company a dominant position. While the designation itself is not an accusation of anticompetitive behavior, it serves as a legal foundation for the CMA to proactively address potential issues and enforce changes to ensure fairness and competition in the digital marketplace.
New Regulatory Powers
The CMA’s decision to grant Google “strategic market status” is a significant step in the UK’s efforts to regulate big tech. This new designation is part of the Digital Markets, Competition and Consumers (DMCC) Act, which provides the CMA with enhanced powers to address antitrust concerns in digital markets. To be designated with SMS, a company must meet specific criteria, including having annual revenues exceeding £1 billion in the UK or £25 billion globally, and demonstrating “substantial and entrenched market power in a digital activity.” With this designation, the CMA can now impose conduct requirements on Google, order changes to its business practices, and issue fines for non-compliance.
Potential Interventions
The CMA has outlined several potential remedies it may consider to promote competition. These include the implementation of “choice screens” on Google’s Chrome browser and Android operating system, which would give users a more straightforward way to select alternative search engines. Another proposed measure is to ensure that Google’s search result rankings are fair and non-discriminatory, and to provide businesses with a clear process for lodging complaints if they believe they have been treated unfairly. The regulator is also considering measures that would give publishers more control over how their content is used in Google’s AI-powered search features.
Impact on AI-Powered Search
The CMA’s regulatory reach extends to Google’s artificial intelligence-driven search tools. The “strategic market status” designation explicitly includes AI Overviews and AI Mode, features that generate detailed responses to user queries. This means that the CMA can enforce rules on how these AI features operate, ensuring that they do not stifle competition. However, Google’s Gemini AI assistant is not currently included in the designation, though the CMA has stated that it will keep this under review as the market for AI assistants evolves. The inclusion of AI-powered search in the designation reflects the regulator’s proactive approach to addressing potential competition issues in emerging technologies.
Google’s Response and Industry Context
Google has expressed concerns about the potential impact of the new regulations on innovation and economic growth in the UK. Oliver Bethell, Google’s senior director for competition, argued that some of the proposed interventions could “inhibit UK innovation and growth, potentially slowing product launches at a time of profound AI-based innovation.” He also cautioned against “costly restrictions” that could harm businesses and lead to higher prices for consumers. Google has emphasized the benefits of its current approach, suggesting that the UK has so far avoided the “costly restrictions” seen in other regions, which has allowed for earlier access to new products and services.
Broader Regulatory Landscape
The CMA’s action against Google is part of a broader trend of increased regulatory scrutiny of major tech companies in the UK and around the world. Google is the first company to receive the “strategic market status” designation under the new UK law, but it is unlikely to be the last. Apple is also the subject of a separate UK investigation to determine if its mobile ecosystem should be given the same designation, with a decision expected soon. This move by the CMA follows years of regulatory investigations and legal challenges against Google, including a £5 billion class-action lawsuit in the UK alleging that the company abused its dominant position to inflate ad prices.
Next Steps and Future Implications
The CMA has indicated that it will begin discussions later this year to determine the specific remedies that will be implemented. The regulator has gathered feedback from over 80 stakeholders since it first proposed Google’s designation in June. The watchdog’s executive director for digital markets, Will Hayter, has stated that the designation will allow the CMA to “pursue proportionate interventions to maintain open competition.” In 2026, the CMA plans to launch another review to further examine Google’s bargaining power with publishers and its control over the search advertising market. The outcome of this process will have significant implications for the future of digital competition in the UK and could set a precedent for other regulators globally.