UK’s CMA to Regulate Google Search Using New Powers

LONDON – The UK’s Competition and Markets Authority (CMA) has officially designated Google with “strategic market status” for its search and search advertising services, escalating regulatory scrutiny over the tech giant’s dominance. This decision, announced Friday, follows a nine-month investigation that concluded Google possesses “substantial and entrenched market power” within the UK’s digital landscape. The move equips the CMA with new powers to potentially reshape how Google operates in the country, marking a significant development in the global debate over the regulation of Big Tech.

While the designation doesn’t equate to a finding of wrongdoing, it signals the CMA’s intent to closely monitor Google’s activities and potentially mandate changes to its search practices. According to the published roadmap, the intervention could require Google to implement fairer search rankings. The investigation explored concerns that Google leveraged its market power to favor its own services and disadvantage competitors, potentially stifling innovation and consumer choice. The CMA will consult with Google and other stakeholders to determine specific measures, with possible interventions including greater transparency in search algorithms and limitations on self-preferencing.

Notably, the CMA clarified that Google’s Gemini AI assistant falls outside the scope of this designation, although other AI-based search features are included. This distinction highlights the evolving nature of search technology and the challenges regulators face in keeping pace with rapid innovation.

“We have found that Google maintains a strategic position in the search and search advertising sector – with more than 90% of searches in the UK taking place on its platform,” Will Hayter, executive director for digital markets at the CMA, said in a statement. The sheer volume of search queries handled by Google in the UK underscores the company’s gatekeeper role in accessing information and reaching consumers.

In response, Google acknowledged the designation but cautioned against overly restrictive regulations that could stifle innovation. “Many of the ideas for interventions that have been raised in this process would inhibit UK innovation and growth, potentially slowing product launches at a time of profound AI-based innovation,” said Oliver Bethell, senior director of competition at Google. The company argues that its search product contributes billions of pounds to the UK economy and that overly burdensome regulations could hinder its ability to invest and innovate in the country.

Google’s parent company, Alphabet, has demonstrated a commitment to the UK with a £5 billion (approximately $6.8 billion at the time of announcement) investment in the country’s AI development, including the construction of a cutting-edge data center north of London, announced last month. This investment highlights the UK’s attractiveness as a hub for technological innovation and underscores the delicate balancing act the CMA faces: promoting competition while fostering an environment conducive to investment and growth.

Government officials have emphasized the importance of fostering a competitive digital market while attracting foreign investment. Google’s Bethell suggests that the UK should focus on “avoiding unduly onerous regulations and learning from the negative results seen in other jurisdictions” to continue reaping the benefits of Google’s innovations.

The CMA’s strategic market status designation represents a significant step in utilizing its new powers, which are designed to “improve competition in digital markets, helping to drive innovation, investment and growth across the U.K. economy.”

Beyond search, the CMA is separately investigating Google’s mobile operations, suggesting a broader effort to scrutinize the company’s dominance across various facets of the digital ecosystem. This comprehensive regulatory approach reflects a global trend as governments worldwide grapple with the challenges of regulating powerful tech platforms.