Google has warned the UK against imposing «onerous» and costly regulations after the competition watchdog ruled it had «strategic market status» for its search services.
The Competition and Markets Authority (CMA) said legal tests had been met to designate Google with the status in general search and search advertising services due to «substantial and entrenched market power», with more than 90% of searches in the UK taking place on its platform.
The designation gives the CMA greater control on how Google operates its UK services.
The regulator said the Alphabet-owned firm’s Gemini AI assistant was not in the scope of the designation but other AI functionality, including AI Overviews, were.
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It launched the inquiry in January after new powers came into force and had previously flagged the finding in a provisional decision.
The CMA said the legislation allowed proportionate action to «improve competition in digital markets, helping to drive innovation, investment and growth across the UK economy».
It added that it would begin consultations on possible remedies soon.
What could happen?
These could include demanding changes to its search engine in the UK, including through so-called «choice screens», and giving publishers more power.
Any action could risk a row with the government, as ministers seek a «growth first» agenda within the country’s regulatory bodies.
Will Hayter, executive director for digital markets at the CMA, said: «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.
«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.»
Google responded by arguing that the designation risked unintended consequences such as price rises and hits to innovation and growth.
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Its senior director for competition, Oliver Bethell, said: «The UK enjoys access to the latest products and services before other countries because it has so far avoided costly restrictions on popular services, such as search.
«Retaining this position means avoiding unduly onerous regulations and learning from the negative results seen in other jurisdictions, which have cost businesses an estimated 114 billion euros (£99.2 billion).
«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.
«Others pose direct harm to businesses, with some warning that they may be forced to raise prices for customers.»