Google will be forced to loosen control over search in the UK

The British competition authority has told Google it will have to loosen control over its search engine under new, stricter digital market rules.

The search giant has become the first company to be designated by the UK Competition and Markets Authority (CMA) with the so-called “strategic market status” (SMS) under new digital laws that came into effect this year.

The legislation grants regulators new powers to curb big tech dominance where deemed necessary in order to ensure fair competition – in Google’s case, that’s online search and advertising.

The new label means that the CMA will be able to intervene in the Alphabet-owned company’s operations in Britain and compel it to change its approach to the search market.

"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," the CMA's Executive Director for Digital Markets Will Hayter said in a statement.

The CMA said that the designation did not mean it found any wrongdoing or meant the introduction of any immediate requirements.

However, the regulator said in June that Google may be forced to rank businesses more fairly in its search results and make alternative search engines more accessible.

“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 for competition at Google.

Google also warned that the stricter regulation in the UK will put it at the same league as the EU, where many of the new products and features are released later than the rest of the world over compliance issues.

For example, Google AI Mode was launched in the EU only this week, compared with the UK, where it was released in the summer.

Still, many other companies, including OpenAI, roll out new features in both the EU and the UK with a delay, as the regulatory landscape in both regions is stricter than in the US.

Both Google AI Mode and AI Overviews will be affected by the new status, but not the Gemini AI assistant.

Balancing act

The CMA can impose fines for non-compliance and has direct enforcement powers, but said earlier that its actions would be targeted and proportionate. It said that the new laws are aimed at unlocking innovation in the British tech sector and broader economy.

The new designation for Google comes after the company pledged to invest £5 billion ($6.6 billion) in the UK, including a new data centre and a partnership with Shell, the British oil and gas multinational.

Google is also completing its gleaming new offices in London’s King’s Cross neighbourhood, while most of the staff at DeepMind, its AI unit, are also based in the British capital.

Its investments are part of the larger $200 billion deal between the British government and US tech giants that critics argue is turning the UK into a “vassal state.”

Still, the government needs to energize the country’s sluggish economy and is careful not to appear hostile to businesses. This will pressure the CMS as it seeks to implement the new regulatory framework.

Aside from online search, Google is also facing an SMS designation over its mobile platforms, as is Apple.