The U.K.’s Competition and Markets Authority said legal tests were met to designate Alphabet’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google with strategic market status in general search and search advertising services.
The British competition regulator said the country’s new digital markets competition regime came into force on Jan. 1, allowing the CMA to take targeted and proportionate action to improve competition in digital markets, helping to drive innovation, investment and growth across its economy.
Google did not immediately respond to a request for comment from Seeking Alpha.
Google’s Senior Director for Competition Oliver Bethell told Reuters: “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.”
The competition watchdog launched an investigation into Google’s general search and search advertising services on Jan. 14 and consulted on its proposed decision in June that Google should be designated with strategic market status, the CMA noted.
In July, the CMA intensified its scrutiny of Apple (AAPL) and Google, proposing to label both as holding strategic market status, or SMS, due to their dominant roles in mobile ecosystems. The agency said then that the tech giants wield “substantial and entrenched market power” and a “position of strategic significance” regarding digital activity in the U.K.
The CMA said on Friday that it gathered evidence and received feedback from more than 80 stakeholders and also had constructive engagement with Google.
Following this, CMA confirmed that Google has substantial and entrenched market power in general search and search advertising and has been designated with strategic market status.
The CMA noted that Google’s Gemini AI assistant is not in scope of the designation. But added that this position will be kept under review given uncertainty over how the market is developing and could be amended in the future.
However, Google’s other AI-based search features, such as AI Overviews and AI Mode, are in scope of the designation, according to the regulator.
The CMA clarified the scope of designation with respect to Google’s news products, and Google’s syndication products.
The regulator noted that designating Google with SMS is not a finding of wrongdoing and does not introduce any immediate requirements.
The agency added that it enables the CMA to consider proportionate, targeted interventions to ensure that general search services are open to effective competition.
“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,” said Will Hayter, executive director for Digital Markets at the CMA.
The CMA expects to start consulting on possible interventions later in the year.
The EU was the first to give similar designations to big tech companies and some of the products offered by them. In September 2023, the European Commission designated for the first time six gatekeepers — Alphabet, Amazon (AMZN), Apple, Meta Platforms (META), Microsoft (MSFT) and Chinese tech giant ByteDance (BDNCE) — under the region’s Digital Markets Act, or DMA. Certain products provided by these companies come under the DMA and the EU’s Digital Services Act, or DSA — which regulates online intermediaries and platforms that millions of Europeans use every day. The DSA protects consumers and their rights online.