The Competition and Markets Authority (CMA) has designated Google with 'strategic market status' (SMS) in search and search advertising, subjecting the tech giant to tighter regulation under new digital laws. This is the first time the watchdog has applied the SMS designation to a company, giving it the power to enforce changes to Google's UK search business.
The CMA has proposed several potential interventions, including introducing 'choice screens' that would allow internet users to select alternative search services, such as AI-powered rivals like Perplexity and ChatGPT. Other proposals include ensuring fair ranking of search results and giving publishers more control over how their content is used, including in AI-generated responses. Google's AI Overview and AI Mode features are also covered by the designation.
The CMA emphasised that the decision is not a finding of wrongdoing and will not result in immediate action. However, it will begin a consultation on potential changes to Google's business this year. Will Hayter, executive director for digital markets at the CMA, said the move aims to promote competition and drive investment across the UK economy, noting that Google handles more than 90% of searches in the UK.
Google has criticised the decision, with Oliver Bethell, senior director for competition, warning it could endanger UK users' access to new products and services. He argued that many proposed interventions would inhibit innovation and growth, particularly in the context of AI development. Meanwhile, competition lawyer Tom Smith of Geradin Partners backed the CMA's move, citing similar actions in the US and EU to address market distortions caused by Google's monopoly.
The CMA is separately investigating whether Apple and Google's mobile phone platforms should also receive SMS designation under the Digital Markets, Competition and Consumers Act 2024.
