The Competition and Markets Authority (CMA) has confirmed that tech giant Google has strategic market status (SMS) in general search and search advertising services.

The move comes after an investigation by the regulator found that the company has “substantial and entrenched” market power in general search and search advertising.

Under new rules which came into force at the beginning of the year, the CMA can take targeted and proportionate action to improve competition in digital markets, helping to drive innovation, investment and growth across the UK economy.

The CMA launched a probe into Google’s general search and search advertising services on 14 January under the new rules and consulted on its proposed decision in June that Google should be designated with strategic market status.

Since this proposed decision, the CMA has gathered evidence and said it has received feedback from more than 80 stakeholders as well as having constructive engagement with Google.

The UK watchdog added that while Google’s Gemini AI assistant is not in scope of the designation, it will keep this under review given uncertainty over how the market is developing.
The CMA also confirmed that other AI-based search features, such as AI Overviews and AI Mode, are in scope of the designation.

The regulator said that designating Google with SMS is not a finding of wrongdoing and does not introduce any immediate requirements.

However, the designation enables the CMA to consider proportionate, targeted interventions to ensure that general search services are open to effective competition, and that consumers and businesses that rely on Google can have confidence that they are treated fairly.

The CMA said it expects to begin consulting on possible interventions later in the year.

“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, driving investment across the UK economy,” 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 per cent of searches in the UK taking place on its platform. “

In August, the CMA concluded that Amazon and Microsoft’s dominance in the country’s cloud computing sector is having a negative impact on competition, potentially leading to higher prices and reduced choice for businesses.

Following a 21-month investigation, the CMA’s independent inquiry group found that Microsoft and Amazon Web Services (AWS) jointly command as much as 70 per cent of UK customer spend in the cloud market.

The panel highlighted concerns over technical and commercial barriers to switching providers, as well as Microsoft’s software licensing practices, which were said to “adversely impact the competitiveness of AWS and Google in the supply of cloud services.”

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