CMA designates Google with Strategic Market Status following investigation

The UK Competition and Markets Authority designated Google with Strategic Market Status on September 30, 2025, following a comprehensive investigation that concluded the company possesses substantial and entrenched market power in general search services and search advertising. The designation represents the first SMS determination under the Digital Markets, Competition and Consumers Act 2024.

According to the CMA's final decision notice, the designation encompasses Google Search accessed through any medium, including all information returned through its underlying infrastructure. This includes generative AI features such as AI Overviews and AI Mode, other features presented on the search engine results page such as specialized search units, videos and maps, and the Top Stories carousel. The designation covers Google Ads and Search Ads 360 when they provide search advertising, alongside Programmable Search Engine and Web Search Syndication when configured to provide general search.

The CMA launched its SMS investigation on January 14, 2025, examining whether Google meets criteria for Strategic Market Status designation. Data from the CMA shows Google currently accounts for more than 90 percent of all general search queries in the UK. The regulator noted that search advertising spending nearly doubled from £8 billion in 2019 to £15 billion in 2023.

In 2024, around 200,000 to 300,000 unique entities used Google's search advertising in the UK, according to the CMA documents. Google submitted that Google Search helped provide an estimated £118 billion in economic activity in 2023 in the UK, supporting over one million businesses.

The investigation assessed several dimensions of Google's market position. The CMA found Google holds substantial market power based on high market shares exceeding 90 percent, substantial barriers to entry and expansion, and the absence of sufficient competitive constraints from existing or potential competitors. The regulator examined Google's market position from multiple angles, including revenue data, query volumes, and switching costs for consumers and advertisers.

Google's search advertising takes primarily two forms, according to the CMA analysis. Text advertisements resemble organic search results but are labeled sponsored. Shopping advertisements, also known as product listing advertisements, can be purchased by comparison shopping services. In 2024, text ads accounted for a specific percentage of all adverts displayed and clicks on Google Search, while shopping ads accounted for another percentage.

The CMA's analysis included extensive examination of AI features integrated into Google's search infrastructure. Google launched AI Overviews in the UK in 2024 as a search feature which provides a quick answer on the search engine results page in response to a user's query that is created by generative AI algorithms. Google introduced AI Mode to UK users on July 28, 2025, allowing users to ask anything on their mind and instantly receive an AI-powered response.

The CMA's decision addressed the relationship between traditional search and AI assistants. The regulator found that Google's Gemini AI assistant remains outside the scope of the designation. The CMA explained that the Gemini AI assistant is presented, branded, accessed, and monetized differently from Google Search, uses Google Search as an input to produce original responses, and serves use cases requiring more sophisticated and conversational exchanges.

Analysis by the CMA revealed implications of AI-powered search features on traffic patterns. When AI Overviews appear in search results, the first organic link loses an average of 34.5 percent of clicks, according to Ahrefs analysis comparing searches from March 2024 with the same period in 2025.

The CMA examined competitive constraints from various sources. The regulator assessed whether Microsoft Bing, DuckDuckGo, and other search engines provide sufficient competitive pressure. The investigation found that Google's default agreements across major access points, including browsers and mobile devices, contribute to maintaining its market position. Data showed Google pays billions annually for default search placement.

Google's advertising infrastructure received detailed scrutiny. The CMA documented that advertisers can buy search advertising through three channels: Google Ads, Search Ads 360, and through third-party interfaces using the Google Ads API. Originally named AdWords and launched in 2000, Google Ads is an advert-buying tool which advertisers can use to display advertisements, service offerings, product listings, video content and generate mobile application installs within the Google advertising network.

Search Ads 360, previously known as DoubleClick Search and introduced after Google acquired DoubleClick in 2008, is a tool that helps advertisers buy and manage search marketing campaigns across multiple advertising platforms including Google Ads as well as Microsoft Advertising, Baidu, Facebook and others. The CMA noted that while advertisers can manage their adverts directly through the front end of each ad buying tool like Google Ads, SA360 offers enhanced enterprise-level features that enable agencies and marketers to manage ad campaigns across multiple advertising platforms.

The investigation revealed developments in Google's advertising technology. In May 2025, Google introduced AI Max for Search and Smart Bidding Exploration, features which both use AI. Performance Max, part of Google Ads, allows advertisers to set objectives for their advertising campaign with Performance Max allocating spend across all Google advertising channels accordingly.

The CMA's assessment considered emerging competitive dynamics. The regulator examined whether AI assistants including ChatGPT, Perplexity, and others present competitive constraints on Google's search services. The investigation noted that AI assistants' potential to exercise a competitive constraint on Google's search advertising remains uncertain, with monetization being unclear for many AI assistant providers.

Google submitted extensive representations challenging the proposed designation. According to documents dated July 22, 2025, Google argued that the CMA's reasoning regarding return on investment from Google Search ads creates a more effective form of advertising market power based on flawed logic. Google contended that high return on investment indicates Google offers a higher quality service resulting from competition on merits.

The CMA rejected Google's arguments about competitive constraints from retail media advertising providers including Amazon. While acknowledging that specialized search providers such as Amazon could become more attractive alternatives, the CMA found that current evidence does not indicate these platforms provide sufficient competitive pressure to prevent Google from exercising substantial market power in search advertising.

The designation establishes parameters for the CMA's conduct requirements roadmap. The regulator published its roadmap on January 14, 2025, outlining potential measures to address competition concerns arising from Google's substantial and entrenched market power. Priority areas include measures relating to choice and trust, restrictions on self-preferencing behavior, and requirements to provide access to click and query data.

The CMA outlined several categories of potential interventions. Category one includes issues the regulator plans to prioritize in the first half of Google's SMS designation period. These measures could include requirements to offer UK users a prominent choice screen enabling them to select their preferred search engine, restrictions on Google's ability to preference its own products in search results, and requirements to provide advertisers with access to performance data.

The roadmap addresses transparency of advertising on the search engine results page. The CMA stated it wants to consider measures to improve the transparency of how ads are presented to consumers on the SERP, in pursuit of the statutory objective of trust and transparency. Consumers may not always be able to identify that some links, typically appearing at the top of the SERP, are ads.

The CMA's decision follows parallel regulatory developments across jurisdictions. In the European Union, Google was designated as a gatekeeper under the Digital Markets Act for both search and advertising services. In the United States, multiple antitrust proceedings address Google's search and advertising businesses.

The designation notice specified products outside the scope of the relevant digital activity. These include Google's standalone specialized search services, Programmable Search Engine and Web Search Syndication when not configured to provide general search, Google News, Gemini AI assistant, and Google's advertising products when they do not provide search advertising such as Google Ad Manager which provides display advertising.

Google's market position extends across multiple product categories. In 2024, the top 10 sectors receiving traffic from Google's general search services in the UK covered various areas. These sectors were responsible for just over a specific portion of all Google's UK queries in 2024, according to CMA data.

The CMA found that Google is an important source of traffic for specialized search providers, although this varies significantly depending on sectors. On average, specialized search providers rely on Google for a significant part of their traffic, with the figure reaching 30 to 40 percent in 2024.

The designation will remain in effect for an initial period of five years. The CMA may update the scope of the designation during this period through consultation procedures. The regulator stated it would carry out public consultation before deciding whether to update parameters to include additional products such as the Gemini AI assistant within the scope of the SMS designation.

The CMA's analysis detailed Google's integration of AI throughout its search infrastructure. The regulator noted that Google has been using machine learning and AI technology in Search for at least a decade. Google launched AI Overviews in the UK in 2024 as a search feature which provides a quick answer on the SERP in response to a user's query created by generative AI algorithms.

According to Google's March 5, 2025 announcement, the company was expanding AI Overviews and introducing AI Mode. Google rolled out AI Mode in the US on May 20, 2025. The feature combines advanced capabilities of Gemini 2.0 with Google's information systems, using advanced reasoning capabilities to improve factuality.

The CMA examined how Google's AI features affect advertising monetization. Google announced at Think Week 2025 that ads in AI Overviews enable advertisers to place businesses into responses growing user satisfaction. Ads in AI Mode, currently in US testing, integrates advertisements into Google's most advanced search experience.

Internal CMA estimates indicate the cost of search advertising now equates to nearly £500 annually per UK household. The investigation documented rising advertising costs alongside Google's maintained market dominance. Industry experts noted that despite discussions about AI disruptions, Google continues operating the most central online platform to match supply and demand.

The CMA's final decision represents the culmination of a nine-month investigation process. The regulator reviewed extensive evidence including internal Google documents, market data, and submissions from third parties across the digital advertising ecosystem. Stakeholders provided input through public consultation processes conducted throughout the investigation period.

Google's response emphasized the company's contributions to UK businesses and consumers. Oliver Bethell, Google's Director of Competition, stated that Search helps millions of British businesses grow and reach customers in innovative ways. Google submitted that its main competitors in search advertising include general search providers, specialized search providers, marketplaces, social media platforms, and offline media such as television.

The designation establishes monitoring and compliance frameworks. The CMA will oversee Google's adherence to conduct requirements once implemented. The regulator maintains authority to impose financial penalties for non-compliance with designated conduct requirements, with potential fines reaching significant percentages of annual worldwide group turnover.

The CMA's decision considers future competitive dynamics over a five-year horizon. The regulator assessed whether expected developments in AI assistants, retail media, or other platforms might materially change Google's competitive position. The investigation concluded that while these areas may develop, current evidence does not indicate they will sufficiently constrain Google's market power during the designation period.

Industry reaction to the designation varied across stakeholder groups. Publishers expressed concerns about traffic losses due to AI features. Advertisers noted implications for campaign strategies and budget allocations. Smaller search engines and technology companies viewed the designation as a potential pathway to increased market access.

The CMA acknowledged uncertainties in rapidly developing technology markets. The regulator stated it would continue monitoring market developments and may adjust requirements as needed. The designation framework allows for periodic review of Google's market status and applicable conduct requirements.

Google's advertising products continue evolving alongside the regulatory process. The company introduced multiple AI-powered features throughout 2025, including enhanced campaign creation tools and automated bidding capabilities. These developments occur as the CMA establishes conduct requirements addressing competition concerns.

The designation affects approximately 68 million UK internet users who regularly access search services. The CMA noted that in 2024, Google's search services reached nearly every UK household and business. The investigation documented how Google's position across multiple access points reinforces its market power.

The CMA found that Google's default search agreements create barriers to competition. These arrangements span major browsers, mobile operating systems, and device manufacturers. The investigation examined whether these agreements foreclose rivals from accessing distribution channels necessary for meaningful competition.

Search advertising represents a critical component of digital marketing for UK businesses. The CMA documented how businesses across industries rely on Google's search advertising to reach customers. The designation aims to ensure fair competition while maintaining advertiser access to effective marketing channels.

The regulatory framework under the Digital Markets, Competition and Consumers Act 2024 provides the CMA with enhanced powers. These include the ability to designate firms with SMS, impose conduct requirements, and investigate potential breaches. The Act establishes a comprehensive regime for regulating digital markets.

Google's market power extends beyond basic search functionality. The CMA examined how Google's integration of services including Maps, Shopping, and Flights creates ecosystem effects. The investigation assessed whether this integration unfairly advantages Google's own services over competitors.

The CMA's roadmap outlines potential interventions across multiple categories. These include measures relating to consumer control over data use, requirements for interoperability with competing services, and restrictions on exclusive arrangements. The regulator will prioritize areas based on potential impact on competition and consumers.

The designation concludes the first phase of the CMA's oversight under the new digital markets regime. Implementation of specific conduct requirements will follow through separate consultations and decision processes. The CMA indicated that initial conduct requirements could take effect within months of the designation.

Timeline

• January 14, 2025: CMA launches SMS investigation into Google Search and search advertising services
• March 5, 2025: Google announces expansion of AI Overviews and introduction of AI Mode
• May 20, 2025: Google rolls out AI Mode to US users
• May 30, 2025: Brazilian journalism organizations escalate criticism of Google's AI features
• July 22, 2025: Google submits representations challenging proposed SMS designation
• July 28, 2025: Google introduces AI Mode to UK users
• September 6, 2025: Google announces AI Mode may become default search experience
• September 10, 2025: Google unveils comprehensive AI advertising suite at Think Week 2025
• September 16, 2025: Google announces Power Pack strategy combining AI Max campaigns
• September 22, 2025: Google introduces AI-powered campaign features
• September 30, 2025: CMA issues final decision designating Google with Strategic Market Status

Summary

Who: The UK Competition and Markets Authority designated Google with Strategic Market Status following an investigation examining the company's position in general search services and search advertising markets.

What: The designation classifies Google as having substantial and entrenched market power based on market shares exceeding 90 percent, substantial barriers to entry and expansion, and absence of sufficient competitive constraints. The designation covers Google Search, AI Overviews, AI Mode, Google Ads, and Search Ads 360 when providing search advertising.

When: The CMA announced the final designation decision on September 30, 2025, following an investigation launched on January 14, 2025. The designation will remain in effect for an initial period of five years.

Where: The designation applies to Google's operations in the United Kingdom, where the company accounts for more than 90 percent of general search queries. The decision affects approximately 68 million UK internet users and between 200,000 to 300,000 advertisers using Google's search advertising services.

Why: The CMA determined that Google possesses substantial market power that allows the company to behave independently of competitive pressures. The designation enables the regulator to impose conduct requirements addressing competition concerns including restrictions on self-preferencing, requirements for data access, and measures promoting consumer choice in search engines.