Google Faces Regulatory Overhaul in the UK: Strategic Market Status and Potential Operational Changes

Google might be compelled to alter the functioning of its search engine in the United Kingdom. As part of new regulations introduced by the UK’s competition authority, this could potentially involve providing users with the option to select alternative search services.

Strategic Market Status Designation

On Friday, the Competition and Markets Authority (CMA) designated Google Search with Strategic Market Status (SMS). This classification is assigned to companies deemed to possess “substantial and entrenched market power,” thereby enabling the regulator to exercise greater authority over Google. This decision followed a ten – month investigation into Google and marks the first application of the powers conferred by the UK’s new Digital Markets, Competition and Consumers Act against a major tech company. Under this legislation, Google’s SMS status will remain in effect for up to five years. The CMA has also identified Apple as a potential candidate for SMS regarding its mobile platform, though the investigation into Apple is still underway.

Potential Regulatory Changes

In June, the CMA published a roadmap outlining potential regulatory changes for Google, should it be designated with SMS. Proposed measures include the requirement for “choice screens” on Google, allowing users to select rival search engines. Additionally, “fair ranking principles” are on the agenda, which would enable companies to raise concerns about their appearance in Google Search. There is also a push for increased data portability, facilitating easier data transfer between search engines.

The new measures may also involve compelling Google to seek permission for using publishers’ content in its AI Overviews “without affecting their presence and ranking in Google Search.” This could have a positive impact on UK publishers. A report from Enders Analysis indicates that the visibility of major UK publishers in search results has dropped by up to 80 percent compared to 2019, in tandem with the increasing frequency of AI results.

Stakeholder Reactions

Rocio Concha, the director of policy and advocacy at UK consumer watchdog Which?, stated, “The decision to formally designate Google with Strategic Market Status is an important step towards enhancing competition in digital markets. With the increasing adoption of generative AI tools in online search, the CMA must act to address Google’s current harmful dominance and promote competition among generative AI – based search tools.”

The CMA asserts that Google Search accounts for over 90 percent of all general search queries in the UK. In 2024, more than 200,000 UK firms collectively spent over £10 billion ($13.3 billion) on Google search advertising. The CMA decision report notes, “Designating Google with SMS allows us to consider proportionate, targeted interventions to ensure that general search services are open to effective competition, and that consumers and businesses relying on Google can be confident of fair treatment.”

In response to the CMA’s decision, Google’s senior director of competition, Oliver Bethell, in a statement shared with WIRED, argued that many of the proposed intervention ideas would “hinder UK innovation and growth, potentially delaying product launches during a period of profound AI – based innovation.” He further added, “Others would directly harm businesses, with some warning of potential price increases for customers.”

Greg Dowell, a senior competition knowledge lawyer at Macfarlanes, remarked that such a response from Google was not unexpected. “We can anticipate that Google and other major tech firms subject to these new rules will attempt to defend their practices on the grounds of being pro – consumer. Ultimately, it is natural for Google and similar firms to resist constraints on their new product development capabilities.”

Scope of the New Regulation

The new regulation will impact Google Search’s “News” tab, “Top Stories” carousel, and Google Discover. However, Google News, the company’s stand – alone news product, and the AI chatbot Gemini are not affected, as per the CMA.

Dowell opined that implementing this roadmap could take several months. He explained, “The CMA may exceed the EU’s approach under the [Digital Markets Act], especially regarding restrictions on Google’s AI services and their integration into Google search. The CMA has a high degree of flexibility in the interventions it can impose, enabling it to respond continuously to emerging developments. This is an advantage of the UK digital markets regulation regime, particularly when compared to the EU, where such rules are fixed within the regulation itself.”