Briefing Note: Competition & Markets Authority Investigation into Google’s General Search and Search Advertising Services

Date: 16 January 2025

Subject: Investigation into Google’s compliance under the Digital Markets, Competition and Consumers Act 2024

Purpose: This briefing addresses the Competition & Markets Authority (CMA’s) investigation into Google’s general search and search advertising services. The investigation evaluates Google's compliance under the digital markets competition regime and assesses whether Google should be designated as having Strategic Market Status (SMS). If designated, specific Conduct Requirements and Pro-Competition Interventions could be imposed to enhance competition, innovation and consumer protection.

Key Context

1. Market Dominance: Google accounts for over 90% of the UK general search market, generating high revenues from search advertising. Its market share and control over key access points create significant barriers for competitors.
2. Economic Impact: UK advertising spend on search has doubled between 2019 and 2023 to £15 billion, with Google dominating the sector. Search advertising costs equate to £500 per household annually. Yes, that is £15 billion a year spent on advertising, the same amount the UK government provides as an annual block grant to Northern Ireland. (note: see definition of adverting at the end of the article). 
3. AI Integration: Emerging AI technologies, including Google’s Gemini AI, are altering the landscape of search services. Competitors face challenges in accessing equivalent resources and data to remain competitive.

Scope of Investigation

The investigation considers:

• Google’s general search activities, including all user-facing elements such as organic results, paid advertisements and AI-driven features.
• Google’s search advertising activities, encompassing platforms such as Google Ads and Search Ads 360.
• Interlinkages between these services, given Google’s two-sided business model.

Key issues include:

• Barriers to entry for competitors.
• Leveraging market power across digital activities.
• Potential exploitative practices impacting users, advertisers and publishers.

Issues Explored

1. Weak Competition and Innovation Barriers: Economies of scale, network effects, default positions, and extensive data collection reinforce Google’s dominance. This limits the viability of competitors, including AI-based search alternatives.
2. Market Power Abuse:  Google’s integration of AI services and preferential treatment of its products could unfairly disadvantage competitors. Leveraging user data across services raises concerns about transparency and market fairness.
3. User Exploitation: Concerns include insufficient user control over data usage and unfair practices towards publishers, such as inadequate remuneration and data-sharing terms.

Proposed Interventions

• Facilitating Market Entry: Measures include restrictions on revenue-sharing agreements, mandatory choice screens for default search engines, and equitable access to Google’s data resources.
• Preventing Market Power Abuse: Proposals include restrictions on self-preferencing, separation of user data across Google services, and limitations on combining search and AI data crawlers.
• User Protection: Suggested measures involve enhancing consumer data control, ensuring fair search rankings, and mandating transparent payment terms for publishers.

International Considerations

The CMA is evaluating global regulatory measures, including:

• EU Digital Markets Act, mandating fair data sharing and anti-self-preferencing rules.
• US District Court findings on Google’s monopoly power and pending remedial actions.
• Australian and Canadian legislation on publisher remuneration.

Next Steps

1. Consultation Deadline: Responses to the CMA’s consultation must be submitted by 3 February 2025.
2. Engagement: Stakeholders will contribute evidence and feedback to shape final decisions. The CMA aims to align its measures with international standards to maximise their effectiveness and proportionality.

The CMA’s investigation addresses critical concerns regarding competition, innovation, and user rights within the digital search and advertising ecosystem. Ensuring fair and competitive markets will deliver long-term benefits for consumers and businesses. Further updates will follow post-consultation.
The question I’m left thinking is that google have held this position in the market for quite some time, what has taken the CMA so long to come to an obvious conclusion? 
While the delay may appear significant, the CMA’s approach reflects caution, the complexity of digital markets and the need to balance robust evidence-gathering with timely intervention. However, the question also underscores a broader critique of regulatory inertia in fast-paced industries, where delayed action can allow entrenched monopolistic behaviour.
The challenge moving forward will be ensuring that the CMA’s interventions are decisive, proportional and forward-looking, particularly in the context of rapidly evolving AI technologies. We will watch this space with interest. 

Definition of Advertising

Advertising refers to the practice of promoting a product, service, idea, or brand to a target audience through various communication channels with the primary goal of influencing attitudes, behaviours, and purchasing decisions. It is typically paid for by an identifiable sponsor and designed to reach a specific audience, often employing strategies such as persuasion, repetition, and emotional appeal.
Etymology: The term derives from the Latin advertere, meaning "to turn toward," reflecting its function of drawing attention to something.
Example Use: An advertisement for a car might emphasise fuel efficiency and safety features to appeal to environmentally conscious consumers.

References:  

1. CMA’s invitation to comment document, January 2025. https://chatgpt.com/c/67891956-9218-8007-979f-6bbf4f0cae00 
2. Oxford English Dictionary (2023). Advertising.
3. Cambridge Dictionary (2023). Advertising.

Disclaimer:

Please note that parts of this post were assisted by an Artificial Intelligence (AI) tool. The AI has been used to generate certain content and provide information synthesis. While every effort has been made to ensure accuracy, the AI's contributions are based on its training data and algorithms and should be considered as supplementary information.