Google’s multi-billion-pound advertising business in the UK is facing a significant threat as the national competition regulator takes action aimed at loosening the company’s grip on the market. The Competition and Market Authority’s (CMA) new “strategic market status” for Google covers both its search and search advertising operations, striking at the heart of how the company makes money.
The search advertising market is the engine of Google’s profits. By controlling over 90% of the search queries, Google also controls the most valuable digital advertising real estate in the country. This allows it to connect advertisers with users at the precise moment of intent, a service for which businesses are willing to pay a premium. The CMA is concerned this dominance inflates advertising costs and stifles competition.
The regulator’s proposed remedies could directly erode this advantage. If “choice screens” successfully encourage millions of users to switch to rival search engines like Microsoft’s Bing or DuckDuckGo, it would create more viable platforms for advertisers to spend their budgets on. This increased competition could drive down the price of search ads and give businesses more options.
Furthermore, any rules on “fair ranking” that impact how shopping ads or other commercial results are displayed could also affect Google’s ad revenue. The goal is to ensure a more level playing field, where the best product or service can win, not just the one with the biggest ad budget on the dominant platform.
While Google’s search product is free to users, its advertising business is not. By targeting the mechanics of the search advertising market, the CMA is aiming for a fundamental rebalancing of the UK’s digital economy, with potentially significant consequences for Google’s bottom line.