Google warns UK rules could slow innovation after designation

The UK Competition and Markets Authority designated Google with Strategic Market Status on September 30, 2025, marking the first SMS determination under the Digital Markets, Competition and Consumers Act 2024. Google responded ten days later with a public statement emphasizing economic contributions while warning against regulatory overreach.

Oliver Bethell, Senior Director of Competition at Google, published the company's response on October 10, 2025. "Today the CMA designated Google Search with Strategic Market Status under the UK's new digital markets regime," Bethell stated. "Next, we will likely face new rules and regulations on how Search works."

According to Bethell's statement, Google Search contributed £118 billion in economic activity in 2023 in the UK alone, supporting over one million businesses. The company emphasized that UK businesses and consumers have been amongst the first to benefit from Google's innovations, often months before their European counterparts.

"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," Bethell wrote. He argued that retaining this position means avoiding unduly onerous regulations and learning from negative results seen in other jurisdictions, which have cost businesses an estimated €114 billion.

Google's response focused heavily on innovation concerns. "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," Bethell stated. The company warned that some proposals pose direct harm to businesses, with some indicating they may be forced to raise prices for customers.

The CMA's nine-month investigation found Google holds market shares exceeding 90 percent in UK search. The regulator documented that search advertising spending nearly doubled from £8 billion in 2019 to £15 billion in 2023. Internal CMA estimates indicate the cost of search advertising now equates to nearly £500 annually per UK household.

Between 200,000 and 300,000 unique entities used Google's search advertising in the UK during 2024, according to CMA documents. The designation encompasses Google Search accessed through any medium, including generative AI features such as AI Overviews and AI Mode, along with Google Ads and Search Ads 360 when providing search advertising.

The Strategic Market Status designation applies for an initial period of five years starting September 30, 2025. The CMA will now develop conduct requirements that Google must follow, a process that could take several additional months. These requirements will likely address how Google operates its search service and search advertising business.

"Google supports the CMA's goal to ensure the UK's competition framework mirrors the best interests of UK consumers and businesses," Bethell concluded. "We hope to see outcomes that reflect such ambitions in the crucial months ahead."

Google's statement highlighted concerns about learning from other jurisdictions. The company referenced the estimated €114 billion cost to businesses from regulations in other markets, though it did not specify which jurisdictions or regulatory frameworks produced these figures. This figure has appeared in Google's responses to EU Digital Markets Act consultations.

The timing of Google's response reflects strategic considerations around AI development. 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 company launched AI Overviews in the UK in 2024 as a search feature which provides quick answers created by generative AI algorithms.

Professor Thomas Höppner, Competition Law expert at Hausfeld, previously commented on the investigation: "Despite all the red herrings about AI disruptions, Google still operates the most central online platform to match supply and demand – to its own advantage." His analysis suggested that AI developments have not fundamentally altered Google's market dominance.

The UK designation follows parallel regulatory actions in other jurisdictions. The European Union designated Google as a "gatekeeper" under the Digital Markets Act for both search and advertising services. In the United States, a District Court ruled in August 2024 that Google had monopoly power in general search and search text advertising.

Google's response differs markedly from its approach in other markets. While the company has challenged EU regulatory frameworks more aggressively, the UK statement adopts a more collaborative tone. Bethell explicitly stated that "Google supports the CMA's goal" and expressed hope for outcomes reflecting mutual ambitions.

The designation represents a significant development for the UK digital advertising industry. Marketing professionals and businesses that rely on Google's search platform now face potential changes to how the service operates. The exact nature of future conduct requirements remains unclear, though the CMA has indicated it will explore interventions including requirements for data sharing with competitors and preventing preferential treatment of Google's own services.

Industry observers note that Google's emphasis on innovation and economic contribution reflects a strategic framing. By highlighting the £118 billion economic impact figure and warning about slowed product launches, the company attempts to position potential regulatory interventions as harmful to the broader UK economy rather than merely affecting Google's business interests.

The regulatory environment has grown increasingly complex for Google. Beyond the UK SMS designation, the company faces ongoing CMA oversight of Privacy Sandbox changes, investigations into ad tech practices, and DMA compliance requirements in the EU.

The £15 billion search advertising market in the UK represents substantial commercial value. With costs equivalent to nearly £500 annually per UK household, any changes to Google's operations could ripple through the entire digital marketing ecosystem. Advertisers, publishers, and intermediaries all depend on Google's infrastructure for significant portions of their business operations.

Google's warning about businesses raising prices suggests the company anticipates conduct requirements that could affect its revenue model or operational efficiency. However, the CMA's investigation found that Google's market power and barriers to entry have contributed to limited competitive pressure, potentially enabling higher advertising costs than would exist in a more competitive market.

The designation's five-year duration provides a substantial period for the CMA to develop, implement, and assess conduct requirements. This timeline exceeds typical regulatory review cycles and signals the authority's commitment to sustained oversight of Google's market position.

Timeline

• January 14, 2025: CMA launches SMS investigation into Google Search dominance
• July 28, 2025: Google introduces AI Mode to UK users
• September 30, 2025: CMA officially designates Google with Strategic Market Status
• October 10, 2025: Google publishes response calling for pro-innovation regulatory framework
• August 2024: US court rules Google monopolized search market
• March 2024: EU Digital Markets Act obligations become binding for gatekeepers
• September 6, 2024: CMA issues statement of objections over Google ad tech practices
• September 24, 2024: CMA provides update on Privacy Sandbox investigation

Summary

Who: Oliver Bethell, Senior Director of Competition at Google, published the company's official response to the UK Competition and Markets Authority's Strategic Market Status designation.

What: Google emphasized its £118 billion contribution to UK economic activity in 2023 while warning that proposed regulatory interventions could inhibit innovation, slow product launches during a period of AI advancement, and force businesses to raise prices. The company called for a pro-innovation regulatory framework that avoids unduly onerous regulations.

When: Google published its response on October 10, 2025, ten days after the CMA announced the Strategic Market Status designation on September 30, 2025.

Where: The response addresses Google's operations in the United Kingdom, where the company accounts for more than 90 percent of general search queries and serves between 200,000 and 300,000 advertisers.

Why: Google's response matters for the marketing community because it signals the company's strategic approach to upcoming regulatory requirements. With search advertising spending reaching £15 billion in 2023, Google's warning about innovation slowdowns and price increases suggests potential operational changes that could affect digital marketing strategies, campaign effectiveness, and advertising costs. The company's emphasis on economic contribution aims to position regulatory interventions as potentially harmful to the broader UK economy, while the CMA's designation reflects concerns about market power and limited competition in a sector where costs equivalent to nearly £500 annually per UK household suggest substantial consumer impact.