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The UK Competition and Markets Authority (CMA) has officially classified Google’s search and search advertising services as having “Strategic Market Status” (SMS) — a landmark move that places the tech giant under tougher regulatory scrutiny under the country’s new Digital Markets Regime.
The designation, announced after months of investigation and consultation with over 80 stakeholders, marks a major step in the UK’s bid to rein in digital monopolies and promote fair competition in the online economy.
According to the CMA, Google’s dominance in the UK search market is “substantial and entrenched,” with the company accounting for over 90% of all search queries conducted nationwide.
“By promoting competition in digital markets like search and search advertising, we can unlock opportunities for businesses big and small to support innovation and growth,”
said Will Hayter, Executive Director for Digital Markets at the CMA.
“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.”
Regulatory Powers and Implications
While the SMS designation does not constitute a finding of wrongdoing, it empowers the CMA to impose binding conduct requirements on Google to promote transparency, fairness, and open access within the search market.
Under the Digital Markets, Competition and Consumers Act, which took effect on January 1, 2025, the CMA now has authority to:
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Enforce pro-competitive conduct rules on designated firms.
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Issue financial penalties for non-compliance.
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Intervene in market practices that may hinder innovation or consumer choice.
Earlier in June, the regulator outlined possible interventions — including measures to ensure fairer search result rankings, improved visibility for rival search engines, and greater user control over search defaults.
Importantly, Google’s AI-driven search features, such as AI Mode and AI Overviews, are covered under this designation. However, the company’s Gemini AI assistant is temporarily excluded, pending future review as the technology matures.
Balancing Regulation and Innovation
Responding to the decision, Oliver Bethell, Google’s Senior Director for Competition, cautioned that some of the proposed measures could slow innovation and product development at a time of rapid AI advancement.
“Many of the ideas for interventions raised in this process would inhibit UK innovation and growth, potentially slowing product launches during a period of profound AI-based innovation,” Bethell said.
Despite these concerns, the CMA maintained that its approach will remain “targeted and proportionate,” ensuring that oversight supports — rather than stifles — innovation in the UK’s digital economy.
The regulator is expected to launch consultations on specific regulatory measures later this year, marking the beginning of a new era of accountability for dominant digital platforms operating in the UK.
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