Google faces stricter regulation in UK over search dominance

By Muvija M and Paul Sandle

LONDON (Reuters) -Google could be forced to change its search operations in the UK after it became the first company subject to new powers from Britain's competition regulator to tackle the dominance of Big Tech.

Competition regulators have long had Alphabet-owned Google in their sights and Britain's landmark ruling on Friday designating Google as having strategic market status in online search, gives the UK's regulator more power to step in.

"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," the Competition and Markets Authority's Executive Director for Digital Markets Will Hayter said.

POSSIBLE INTERVENTIONS

The CMA's move enables it to intervene to ensure Google's search services are "open to effective competition". It is not a finding of wrongdoing and does not trigger any immediate changes, but the regulator can impose fines for non-compliance and has direct enforcement powers.

It outlined changes it could require in June, such as fairer ranking in search, easier access to alternative search engines for consumers and more controls for publishers over how their content is used in AI-generated responses. It is expected to consult on any planned interventions later this year.

Google's Senior Director for Competition Oliver Bethell said: "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."

Google announced last month it would invest 5 billion pounds ($6.65 billion) in Britain.

NEW FRONT AGAINST GOOGLE

The ruling was the CMA's first under new powers to tackle Big Tech. The CMA's second probe into mobile operating systems could also result in Google receiving a designation, focused on Android.

The U.S. Federal Trade Commission launched an investigation into Google and Amazon's search advertising last month, while the U.S. Department of Justice wants to force Google to sell off some of its advertising technology tools.

The European Union hit Google with a $3.45 billion antitrust fine last month for anti-competitive practices in its adtech business.

MORE CONTROL FOR CONSUMERS AND PUBLISHERS

A shift in the political backdrop in Britain makes major intervention less likely, lawyers have said.

After the CMA gained its new powers, the government told it to focus on growth and minimise uncertainty for business. It made former Amazon executive Doug Gurr the CMA's interim chair in January.

Tom Smith, competition lawyer at Geradin Partners and former CMA director, said there was a strong case for removing some of the market distortions caused by Google's monopoly position.

That includes giving website operators more control over how their content is used for AI training, and would remove some of Google's unfair advantage over other AI companies, he said.

Google's Gemini AI assistant was not currently in the scope of the CMA's designation, the regulator said, but other AI-based search features, such as AI Overviews and AI Mode, were.

($1 = 0.7523 pounds)

(Reporting by Paul Sandle and Muvija M; Editing by William James, Emelia Sithole-Matarise and Elaine Hardcastle)