The Memo: Google and Strategic Market Status: What comes next?

For the first time ever, the Competition and Markets Authority (CMA) has leveraged the latest digital markets bill to investigate whether Google has too much search engine power. To put things into perspective, the average person makes between five to ten searches a day, and more than 90% of those are made via Google. What’s more, 200,000 businesses use and spend an average of £33,000 a year on search advertising to reach consumers in the UK. 

Under the Digital Markets, Competition and Consumers Act 2024, the CMA can now, following public consultation, identify businesses which have SMS and demand change when they have too much market power. SMS stands for Strategic Market Status, which is when a business has significant market power linked to digital activity, a position of strategic significance, and a UK turnover of more than £1 billion or a global turnover of more than £25 billion. Though the SMS label doesn’t necessarily mean anti-competitive behaviour has taken place, SMS businesses (such as Google, for example) might be subject to bespoke pro-competition interventions. As it stands, Google hasn’t been accused of anti-competitive practices following the introduction of the 2024 Act, but it’s worth mentioning that in August last year, a US judge ruled that the tech company had operated an illegal search monopoly. What’s more, the visibility of competing search engines has increased in response to the EU’s Digital Markets Act.  

Although we’ll have to wait until October for the outcome of the CMA’s consultation, the regulator has in the meantime proposed a roadmap of potential changes to be made. These will include: requiring choice screens for users to access different providers; fair ranking principals for businesses; more transparency and control for publishers whose content appears in results (with links to AI generated summaries); and the option to move search data to other providers.