The U.K.’s Competition and Markets Authority (CMA) has formally designated Google‘s search and search-advertising operations with “strategic market status” (SMS), granting the regulator sweeping potential powers to intervene in how Google runs its search business and pricing models. This is the first time SMS has been applied since the Digital Markets, Competition and Consumers Act 2024 took effect. The designation covers features such as AI Overviews, AI Mode, and Google’s Discover feed (though not Google News or Gemini for now). Google contests that many of the prospective interventions could stifle innovation and slow down deployment of new products. Meanwhile, the CMA is preparing consultations on a suite of remedies—including choice screens for rival engines, fair-ranking rules, data portability, and protections for content providers—while also evaluating whether to extend SMS to mobile platforms like Android.
Sources: Financial Times, AP News
Key Takeaways
– The SMS designation does not itself signal wrongdoing or impose immediate obligations, but gives the CMA the authority to enforce targeted interventions over Google’s search and advertising operations.
– Possible regulatory tools include mandating users be offered alternative search engines (“choice screens”), enforcing transparent ranking rules, facilitating data portability, and giving publishers more control over how their content is used.
– Google warns that overly aggressive regulation may slow innovation and product rollout in the U.K., while regulators argue the move is essential to level the playing field in a market where Google holds over 90 % of search share.
In-Depth
In a decisive move this October, the U.K.’s antitrust authority—the Competition and Markets Authority—has designated Google’s search and search advertising services with Strategic Market Status, utilizing new powers granted by the Digital Markets, Competition and Consumers Act of 2024. Under this status, Google becomes subject to a special regulatory regime designed to oversee how it operates its search engine business, ensuring it cannot leverage dominance unchecked in web search and associated advertising markets.
What makes this especially notable is that SMS is a forward-looking instrument rather than a retrospective penalty. The CMA is not accusing Google of misconduct per se, but instead asserting that Google’s market power has become so entrenched that it requires oversight mechanisms to safeguard against unfair practices. The regime is tailored: it covers AI-related search enhancements like AI Overviews and Mode as well as search advertising services, though it explicitly excludes (for now) Google News and Gemini, the AI assistant. The CMA reserves the right to revisit inclusion of services like Gemini as the market evolves.
The path forward involves consultations. The CMA plans to solicit input from stakeholders later this year before deploying interventions. Among the remedial options on the table are introducing choice screens—interfaces prompting users to pick from rival search engines—and embedding fair ranking rules to prevent Google from biasedly positioning its own services or demoting competitors. Also under consideration are rules for data portability, enabling users to transfer search histories or settings to newer entrants, and protections for publishers to control how their content is displayed or reused in AI-powered summaries.
To Google, these potential constraints evoke alarms. The company argues that imposing rigid rules could curb its capacity to innovate and push new features, particularly in AI, and raise costs for consumers and businesses. It notes that the U.K. has historically benefited from faster access to cutting-edge services, and warns that heavy regulation might reverse that trend. But the CMA is undeterred: it emphasizes that the threshold for SMS was met because Google’s dominance is so durable and opaque that intervening now is crucial to preserve future competition.
Looking ahead, regulators are also eyeing mobile ecosystems: the CMA is already assessing whether to apply SMS to operating platforms like Android and app stores. Whether the interventions that follow will balance competition with innovation remains to be tested—but the designation marks a significant shift in how Big Tech is regulated in the U.K.