What will happen now Google has been given ‘strategic market status’ by CMA?

The Competition and Markets Authority (CMA) has given Google strategic market status (SMS) for search and search advertising.

The regulator said that designating Google with SMS enables it to consider proportionate, targeted interventions to ensure that general search services are open to effective competition, and that consumers and businesses relying on Google can have confidence that they are treated fairly.

Before introducing such interventions, however, the CMA must carry out further public consultation on their terms and impact.

Google products covered by the SMS designation include Google Search, irrespective of how it is accessed, and all the information it returns, including through AI Overviews and AI Mode. “This ensures that our designation reflects the changing nature of Google’s search product. It also includes Google’s organic search,” said the CMA.

But although some people are using Google’s Gemini AI engine for internet searches, the CMA has not included Gemini as part of the SMS designation.

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.

“Having taken into account the feedback received following our proposed decision, we have today designated Google’s search services with strategic market status.”

Numerous companies submitted comments to the CMA’s investigation earlier this year, which focused on whether Google should be designated SMS.

In its submission, browser developer Vivaldi discussed the significant support Mozilla Foundation, which operates the Firefox web browser, received from Google and the status of Google Search in the Firefox browser.

Vivaldi said: “We believe that Google and Microsoft’s search functionality should be available to any browser, and the revenue share should be the same percentage, whichever company uses their search. Neither search provider should be allowed to offer better terms to be default, nor dictate other terms, such as which other organisations a browser vendor partners with for search, or other revenue-generating deals.

“To create fair competition conducive to more innovation and higher consumer benefits, the playing field needs to be levelled for big and small companies. Otherwise, Microsoft and Google will maintain dominance across different market segments by refusing to share search revenue with smaller players.”

However, a comment submitted by airline IAG noted that while Google Flight Search (GFS) plays an important role in the market, IAG said it was not concerned about Google’s strategic market status in respect of its provision of general search and search advertising services. 

The CMA will need to balance the needs of e-commerce sites and those who are calling for Google to be forced to scrap the revenue-sharing deals it has with companies like Apple.

For instance, airline easyJet noted the changes made through the European Union’s Digital Market Authority had led to a significant shift in traffic from GFS to other vertical search services, such as online travel agencies and metasearch engines. “This shift has diluted easyJet’s direct web sales, impacting our ability to offer customers the best value and service,” it said.