UK Antitrust Enforcers Target Google in Inaugural DMCC Investigation
Last month, the UK’s Competition and Markets Authority (CMA) launched its first investigation under the new controversial Digital Markets, Consumers and Competition Act (DMCC) to examine whether Google holds Significant Market Status (SMS) in two markets: general search and search advertising. If Google is designated with SMS, the CMA will subject it to a special ex-ante regulatory regime intended to address alleged anticompetitive behavior. The decision carries major implications for Britain's economy. Indeed, even the CMA has acknowledged Google’s major contributions to the nation's digital markets, noting the company’s services “generated significant benefits” and act as a “gateway through which millions of people and businesses access and navigate the internet.” As such, the CMA must assess its case against Google and avoid repeating the mistakes of jurisdictions like the EU, whose Digital Markets Act (DMA) has already brought about unintended adverse consequences in the search space.
The DMCC applies to firms with a global turnover exceeding £25 billion or a UK turnover above £1 billion. For those firms that meet these quantitative thresholds, the CMA applies a qualitative test to determine whether a company’s digital activity qualifies for SMS designation based on three factors:
- Engagement in a digital activity linked to the UK
- Substantial and entrenched market power in that activity
- A position of strategic significance within it
Once a firm is designated as having SMS, the CMA imposes a broader M&A reporting requirement and special conduct requirements to purportedly ensure fair dealing, open choices, trust, and transparency. Much like Europe’s DMA, fines for non-compliance with SMS obligations are potentially exorbitant and can reach up to 10 percent of a company’s global turnover.
An SMS designation mischaracterizes Google’s position in both search and search advertising. In search, the CMA must account for the rapid transformation of the market with AI-driven alternatives like ChatGPT and DeepSeek. Indeed, ignoring this dynamism would reinforce an outdated 2010-era view of Google’s dominance—a far cry from the CMA’s assertions of being forward-looking in its assessments. Additionally, as ITIF has previously explained in the context of the U.S. antitrust case on search, it is easy to switch from one search engine to another. Moreover, with respect to search advertising, the healthy nature of the search market is underscored by the UK’s surging search ad spend, which has nearly doubled from £7.8 billion in 2019 to £14.7 billion in 2023—hardly a sign of a failing market.
For firms designated with SMS, DMCC 3(20) provides an overview of what conduct will be deemed anticompetitive, such as the requirement to “trade on fair and reasonable terms” or the prohibition against “using data unfairly.” However, unlike the DMA’s general rules for gatekeepers, the DMCC takes a tailored approach and calls for the CMA to issue company-specific codes of conduct. While those company-specific codes of conduct have not yet been specified, the CMA may be likely to follow Europe and, in search, scrutinize Google’s self-preferencing of services like Google Flights and Google Maps. Though self-preferencing can sometimes be anticompetitive, it most often has strong procompetitive justifications. For example, despite the bad press, self-preferencing ultimately enables Google to integrate features beyond just Search (like Maps, Flights, and Shopping) into convenient toolbars that enhance user experience.
In its invitation to comment on the investigation, the CMA indicated it would look to other jurisdictions with similar digital competition regimes when determining any remedies it will impose. Like the EU, the CMA could look to prevent Google from preferencing its integrated Maps and Flights services through convenient toolbars. The CMA also hinted it might mandate choice screens for Android devices. Furthermore, with respect to advertising, the CMA pointed out that several jurisdictions have introduced measures—like Australia’s News Media Bargaining Code and Canada’s Online News Act—to ensure “fair” payment terms for news publishers. The CMA could also consider more sweeping remedies, such as those proposed by the DOJ in the U.S. Google search case, that involve forcing Google to divest Android, Chrome, or both.
While these remedies are unlikely to benefit consumers or competition, they will have significant unintended and harmful consequences. In Europe, Google has become less integrated, with the removal of the Flights and Maps tabs not only resulting in a worse user experience but also shifting revenue away from businesses like restaurants, hotels, and airlines to intermediaries such as TripAdvisor and Yelp. Moreover, renewed choice screens under Europe’s DMA have also done little to weaken Google’s position in search, which is consistent with it having the superior offering. And, as ITIF has explained in the context of the DOJ v. Google case, structural remedies like forced divestitures would be nothing short of disastrous for consumers and innovation.
The CMA must resist the intellectual shortcut of conflating a strong market position achieved by a successful company with market failure. Its mandate should be to protect competition—not use regulation to reengineer markets. As the CMA progresses with its investigation into Google under the DMCC, the EU’s DMA already stands as a cautionary tale: Banning self-preferencing and mandating choice screens has done little to boost competition while actively degrading consumer experience. Moreover, just days ago, President Trump issued a directive targeting Digital Services Taxes stemming from policies like the DMA and DMCC, suggesting that the consequences of using digital competition regulation to target American firms could far outweigh any hypothetical competitive benefits.
