UK watchdog targets Google's 'strategic' role in search ads and a competitive market

Key Points

• The UK's Competition and Markets Authority (CMA) has labeled Google a "strategic" player in the online search advertising market, signaling potential regulatory changes to enhance competition.
• This designation stems from an investigation revealing that Google holds over 90% of the UK's online search market and has "substantial and entrenched market power."
• The CMA is expected to discuss potential measures later this year, which may include choice screens for rival search services and ensuring fair treatment in search results ranking.
• Google has expressed concerns that regulatory interventions could negatively impact UK innovation and potentially lead to higher prices for consumers.

LONDON (AP) — Britain’s antitrust watchdog on Friday labeled Google a “strategic” player in the online search advertising market, paving the way for regulators to force the company to change its business practices to ensure more competition in that market.

The Competition and Markets Authority said its investigation found that the U.S. tech giant has “strategic market status" because it has “substantial and entrenched market power” in general search and search advertising.

It marks the first time the watchdog has issued the designation since new U.K. digital rules took effect at the start of the year.

The label doesn't imply any wrongdoing. But the regulator said it means it has the power to consider using “proportionate, targeted" measures to make sure “general search services are open to effective competition” and that consumers and businesses are treated fairly.

Online search ads appear alongside results from Google's search engine, usually tagged as “Ad” or “Sponsored" — versus online display ads, which appear on a company's website. The CMA says Google accounts for more than 90% of the U.K.'s online searches and more than 200,000 of the country's businesses rely on Google search ads to reach customers

Google said it expects to face new rules and regulations on how its search service works.

The CMA didn’t announce any immediate fixes, saying it plans to begin discussions later this year.

The watchdog has previously outlined possible remedies, including giving users “choice screens” for rival search services when they use products like the Chrome browser and Android mobile operating system. Another proposal is forcing Google to make search results ranking and presentation fair and non-discriminatory, and give businesses an effective way to complain if they’ve been treated unfairly.

“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,” Google's senior director for competition, Oliver Bethell, said in a blog post. “Others pose direct harm to businesses, with some warning that they may be forced to raise prices for customers.”

Google, along with Apple, is the subject of a separate U.K. investigation into whether their mobile ecosystems should be given strategic market status, with a decision expected by Oct. 22.