UK Declares Google Has “Strategic Market Status” in Search Ads

Table of Contents

1. Background & legal framework

1.1 Digital Markets, Competition and Consumers Act 2024

The UK enacted a new law called the Digital Markets, Competition and Consumers Act 2024. This gives the Competition and Markets Authority (CMA) enhanced powers to regulate digital platforms before harms crystallize. (GOV.UK)
Under this regime, the CMA can designate a firm as having Strategic Market Status (SMS) in respect of certain “digital activities.” Once designated, the firm becomes subject to proportionate and targeted interventions / conduct obligations. The idea is to preemptively reign in dominant gatekeepers. (GOV.UK)
The designation is not itself a finding of wrongdoing; it is more like recognizing that a firm’s position is so powerful and entrenched that special oversight is required. (GOV.UK)

1.2 The CMA’s investigation into Google

The CMA launched an inquiry on 14 January 2025 into Google’s general search services and its search advertising business. (GOV.UK)
In June 2025, the CMA published a proposed decision that Google should be designated with SMS, and gathered feedback (from over 80 stakeholders) before confirming. (GOV.UK)
The final decision was published 10 October 2025: the CMA confirmed that Google meets the legal threshold for SMS in general search and search advertising. (GOV.UK)

2. What the designation covers & what is in scope

Knowing what is included and excluded is crucial.

2.1 What is in scope

General Search: The “search engine” product — all the elements of Google’s “search results page” (SERP), including features like “Top Stories,” “News” tab, “Discover,” and other display elements within the SERP are considered part of general search. (GOV.UK)
Search Advertising: Ads that appear “next to” search results when users type queries — i.e. paid search ads via Google Ads, Search Ads 360, and placements on Google’s properties and via “search partner” networks (e.g. sites embedding Google search). (GOV.UK)
AI-based search features: The CMA confirmed that AI Overviews and AI Mode (recent Google features in the UK) are within the scope of the designation. However, Google’s Gemini AI assistant (the standalone AI chat/assistant product) is excluded for now — though the CMA said this exclusion will be kept under review. (GOV.UK)
Syndication / partner search features: Some search results or ads displayed via syndication (e.g. Google powering search boxes on third-party sites) are also considered under scope, depending on how integrated. (GOV.UK)

2.2 What is excluded

The Google News app / website is explicitly out of scope under this designation. (GOV.UK)
Some ad tech / display advertising functions (i.e., non-search / display intermediaries) that don’t tie directly into Google’s search business are not included. (GOV.UK)

3. Rationale: Why the CMA concluded Google meets SMS

The CMA’s rationale is based on the two main legal criteria for SMS:

3.1 Substantial and entrenched market power

Google’s market share is dominant: in the UK, over 90% of general search queries are conducted via Google. (GOV.UK)
Alternative general search engines (e.g. Bing) are small by comparison (less than 5% share) and have had limited growth relative to Google. (GOV.UK)
The dominance is long-standing; no competitor has mounted a credible structural challenge over many years. (GOV.UK)

3.2 Position of strategic significance

Because general search is foundational to the internet — it routes user demand to content and services — control over search gives leverage over many adjacent markets (publishing, advertising, e-commerce).
Many UK businesses rely heavily on Google search and search advertising as a primary channel to reach customers. Interventions or changes by Google can significantly impact large parts of the UK economy. (GOV.UK)
The CMA found that changes to how Google operates search or presents results can have “immediate, substantial and foreseeable effects on trade in the UK.” (GOV.UK)

Given both criteria, the CMA concluded Google qualifies for SMS in both general search and search advertising. (GOV.UK)

4. Effects of designation: what the CMA can (and cannot) do

4.1 Powers unlocked by SMS

Once a firm is designated SMS, the regulator can propose and impose “conduct requirements” to ensure fairer behavior. For Google, that means:

Requiring non-discriminatory ranking / presentation of search results and search ads (i.e. no unfair favoritism of Google’s own services or preferential treatment) (Reuters)
Mandating choice screens: when users first set up a browser (Chrome) or device, allow them to choose their default search engine (i.e. give visibility to alternatives) (The Guardian)
Requiring greater transparency for advertisers, publishers, and search engine competitors about ranking, algorithms, data usage, etc.
Imposing interoperability or data access / portability obligations (for instance, allowing rival search engines to access certain index or data under fair terms).
Giving publishers more control over how their content is used (especially when content is reused or incorporated into AI-generated summaries). (Reuters)
The CMA can enforce compliance, impose fines for breach of the conduct requirements, and monitor over time. (GOV.UK)

However:

The designation itself does not impose immediate requirements; the CMA must consult on possible interventions before imposing them. (GOV.UK)
The interventions must be proportionate and targeted — i.e. not overly burdensome or sweeping. (GOV.UK)
The scope is limited to the digital activities under designation (search & search ads), so Google’s non-search businesses (e.g. YouTube, cloud, maps standalone, etc.) are not directly controlled under this SMS.
The initial designation is for a term of five years, after which it may be reviewed or renewed. (GOV.UK)

4.2 Timeline & next steps

The CMA has indicated it will start consultations later in 2025 on what specific conduct obligations to impose. (GOV.UK)
After consultations, formal rules or obligations would be adopted and enforced.
The CMA is also considering designating Google (and Apple) with SMS in mobile platform / operating system domains (e.g. Android, iOS) in separate investigations. (GOV.UK)

5. Reactions & pushback

5.1 Google’s response and concerns

Google acknowledged the designation but warned that many of the proposed interventions could impede innovation in the UK, slow down product releases, and raise costs for businesses. (Reuters)
Google cited that in 2023, its activity contributed £118 billion in economic output in the UK. (The Register)
Google also emphasized that some interventions — if poorly designed — might harm UK businesses and consumers. (PPC Land)

5.2 Industry, publishers, competitors

Many publishers and smaller search / ad tech firms welcomed the decision, seeing it as a mechanism to reduce Google’s dominance and allow more equitable opportunity in search exposure. The Guardian article lists proposals like choice screens, fair ranking, more control for content publishers. (The Guardian)
Some legal and competition law experts see this as a critical test for the new UK digital regime, aligning the UK with similar moves in the EU and U.S. (The Guardian)
Critics caution that overzealous regulation might stifle competition rather than enable it if intervention is poorly structured.

6. Implications & risks

Here’s how this designation could ripple across sectors and what’s at stake.

6.1 For advertisers & marketers

Potential changes to how ad placements and bidding rules work — e.g. more transparency in auctions, potential restrictions on bundling of ad inventory.
Some costs might shift if Google is required to open more access or change margins.
Advertisers may benefit from a more level playing field, enabling better alternatives to Google Ads.

6.2 For publishers & content creators

More control over how their content is used, especially in AI-generated summaries or overviews.
Better leverage in negotiations with Google for traffic / search inclusion.
More visibility into how ranking algorithms treat content.

6.3 For Google & its business operations

Increased regulatory compliance burden: audits, reporting, algorithm disclosures.
Risk of fines or forced changes that could reduce Google’s competitive advantage.
Need to defend or challenge specific proposed interventions in consultation / legal processes.
Strategic recalibration: Google may adapt products in the UK differently (e.g. slower rollout, divergence) to comply with UK constraints.

6.4 For the digital / tech ecosystem in the UK

Could spur greater innovation in search, ad tech, AI assistants, alternative search engines.
May attract more start-ups seeking less dependency on Google’s gatekeeping.
Demonstrates regulatory willingness to act early — could change behavior of big tech more broadly.
Sets precedent for regulation of AI features tied to dominant platforms.

6.5 Risks & unintended consequences

If regulation is too heavy or mis-designed, it may stifle legitimate innovation or create regulatory drag.
Google might respond by reducing investment in UK market or shifting business focus.
Some interventions (like exposing algorithms) risk overburdening engineers or over-surfacing proprietary models.
Rival search engines may struggle to scale even with more access, meaning intended competition may not materialize fully.
Legal challenges: Google could challenge the designation or specific interventions in U.K. courts, European courts, or international arbitration.

7. Comparative context / analogous regulatory moves

In the European Union, Google is already designated as a “gatekeeper” under the Digital Markets Act (DMA), which imposes obligations on large platforms in various domains (search, advertising, app stores). (Reuters)
In the United States, antitrust actions against Google (e.g. DOJ / state cases) have argued Google holds monopoly power in search and search advertising; some decisions already found aspects of its business practices unlawful.
The UK move is distinctive in that it is forward-looking regulation — not punishing past abuses, but giving regulators powers to steer behavior going forward.

8. Summary & outlook

The UK’s CMA has confirmed that Google meets the criteria for Strategic Market Status (SMS) in both general search and search advertising, under its new digital markets law. (GOV.UK)
This is a landmark move: Google is the first tech firm in the UK to receive this designation. (The Guardian)
The designation itself does not change Google’s operations immediately, but it unlocks the CMA’s power to impose conduct obligations (e.g. fair ranking, choice screens, transparency, data access) after consultation. (GOV.UK)
Google expressed concern that overly rigid regulation might slow innovation or increase costs for businesses, especially amid rapid AI developments. (Reuters)
The next year will be critical: how the CMA frames its consultation, how binding the conduct requirements become, and how Google and the wider market respond will determine the real impact.
For marketers, publishers, and the UK tech ecosystem, this decision could reshape how search, advertising, and content distribution operate in the UK going forward — potentially reducing Google’s gatekeeper power and opening space for alternate technologies, platforms, and models.

Here are three case-studies / deep dives exploring the designation of Google LLC with “Strategic Market Status” (SMS) in the UK — what the issues were, how the regulator analysed them, and what stakeholders are doing in response.

1. The UK SMS Investigation into Google Search & Search Advertising

Background & Process

On 14 January 2025, the Competition and Markets Authority (CMA) formally launched an investigation under the new Digital Markets, Competition & Consumers (DMCC) Act 2024 into Google’s general search and search advertising activities. (GOV.UK)
The CMA published a “Roadmap of possible measures” in June 2025 alongside its proposed decision to designate Google with SMS. (GOV.UK)
On 10 October 2025 the CMA confirmed that Google meets the legal thresholds and has been designated SMS for these services. (GOV.UK)

What happened / Key Findings

Google holds substantial & entrenched market power in both general search and search advertising. For example: the CMA found Google handles more than 90% of search queries in the UK. (GOV.UK)
The services are of strategic significance because they act as a gateway for consumers, businesses and advertisers — changes in Google’s behaviour have “immediate, substantial and foreseeable effects” on UK trade. (GOV.UK)
The designation covers “general search services” and “search advertising” (ads next to search results) and some AI-based features (e.g., “AI Overviews” / “AI Mode”). (Wired-Gov)
The designation does not imply wrongdoing; it creates the regulatory basis for future interventions. (computing.co.uk)

Why it’s a useful case study

It illustrates how a regulator applies a new digital-markets regime: from investigation, consultation, roadmap, to designation.
It shows how dominance in a “core digital activity” (search) translates into concerns for both consumer welfare and business/advertiser outcomes.
It makes clear that regulatory tools are not only about past harm but about future behaviour in digital markets.
It highlights the intersection of search, ad tech, AI features, and regulatory scrutiny in a rapidly changing landscape.

Observations & Insights

The CMA emphasises that setting the search “gate” is key: advertisers rely on Google search ads to reach customers, and publishers rely on Google traffic for reach. That gives Google leverage.
Google’s defence emphasises the benefits it provides (e.g., in the UK it claims £118 billion of economic output) and warns that heavy intervention might hinder innovation. (blog.google)
The regulator’s roadmap shows possible interventions such as: requiring “choice screens” for default search engine, ensuring non-discriminatory ranking of search results, enhancing transparency, requiring data access for rivals. (GOV.UK)
The timing matters: the DMCC Act came into force 1 Jan 2025, so this is among the first major applications of UK’s new digital-markets regulatory regime. (Wired-Gov)

2. Publisher & Advertiser Impacts – What Stakeholders Are Saying

Publisher Perspective

Publishers (news media, sites relying on Google referral traffic) have raised concerns that Google’s dominance in search affects how their content is discovered, ranked, and monetised.
For example, in its consultation responses the Open Markets Institute (a competition think-tank) welcomed the SMS proposal and urged bold action such as forcing Google to share its search index/syndication and opening up rivals. (Open Markets Institute)
One issue flagged: AI summaries (e.g., Google’s “AI overview” treatment of search results) may use publisher content without adequate control or compensation; the designation covers these features. (GOV.UK)

Advertiser & Rival Engine Perspective

Advertisers: Given that Google holds dominant position in search ads, advertisers say they have limited alternative channels, and pricing/bidding dynamics may favour Google-controlled inventory.
Rival search engines: They argue entry barriers are high (because of Google’s default positions on devices/browsers, data advantages, brand recognition) and the CMA’s work may open more opportunity.
For example, the case of a UK class-action lawsuit alleges Google abused its dominance in online search to overcharge advertisers — reinforcing the context of the regulator’s focus. (Reuters)

Why this is a useful case study

It shows how regulatory designations affect ecosystem participants (publishers, advertisers, smaller search rivals), not just the dominant platform.
It underscores how features like default search settings, bundling, data access, and ranking practices become contested when dominance is present.
It offers insight into how regulation may reshape business models: e.g., publishers may negotiate differently, advertisers may explore alternatives, rivals may get door opened.

3. Forward-Looking: Potential Remedies & Future Landscape

What remedies are under consideration

“Choice screens” for users: e.g., when users set up devices or browsers they might be offered a choice of search engine. This would reduce Google’s default advantage. (AP News)
Non-discrimination / Fair ranking: Google may be required to ensure that its own services or ads are not unfairly favoured in the search results. (Financial Times)
Data access / portability / interoperability: Rival search engines might be given access to certain Google data or index/licensing so they can compete more effectively. (Open Markets Institute)
Publishers’ rights: More control for publishers over how their content is used in Google’s search/AI features (i.e., content reuse, AI summarisation). (The Guardian)

What this might mean for Google’s operations

Google has warned that overly onerous rules might slow innovation in the UK, hamper product rollouts, increase costs for businesses using its services. (blog.google)
Google may need to adjust how its search/ad business operates in the UK: e.g., different default settings, altered ranking/ad-allocation practices, enhanced transparency measures.
The SMS status specifically covers search and search ads; other parts of Google’s business (cloud, maps, YouTube) are outside this particular designation — though the CMA is investigating other activities (e.g., mobile platforms) as separate cases. (Wired-Gov)

Why this is a useful case study

It shows how a regulator can use behavioural remedies rather than structural remedies (divestiture) in a digital market context — at least initially.
It illustrates how regulation can be proactive (looking at future conduct) rather than only reactive (punishing past harm).
It provides a model for how jurisdictions could regulate dominant digital platforms in search/ad markets: designation → consultation → remedies.
It reveals the balance regulators must strike between promoting competition and not stifling innovation.

Summary Table

Case Study	Focus	Key Take-aways
UK SMS Investigation (Google)	How the CMA applied the new DMA regime to search & ads	Demonstrates regulatory process, dominance criteria, scope of designation
Publisher & Advertiser Impacts	How stakeholders (publishers, advertisers, rivals) view the consequences	Highlights ecosystem effects, dependency on dominant platform, alternative dynamics
Remedies & Future Landscape	What intervention options are being considered and how Google may respond	Shows possible regulatory tools, strategic response by dominant firm, implications for innovation/competition