Google faces enforced changes to its UK search business after the competition watchdog conferred a special status on the company that puts it under tighter regulation.

The Competition and Market Authority (CMA) confirmed that Google has “strategic market status” (SMS) in search and search advertising, a term that means the company has such market power that it requires a special regulatory regime.

The watchdog now has the power under new digital laws to order changes to how Google operates in those areas. Friday’s announcement is the first time it has designated a tech firm with SMS.

It has already flagged a number of potential changes including giving internet users an option to choose a different search service via “choice screens”. One option for the screens could be to include AI-powered rivals in the search space, such as Perplexity and ChatGPT.

The CMA has also proposed ensuring fair ranking of search results and providing more control for publishers over how their content is used, including in AI-generated responses.

The CMA said its decision was not a finding of wrongdoing and would not result in immediate action. However, it will begin a consultation on potential changes to Google’s business this year.

Will Hayter, the executive director for digital markets at the CMA, said promoting competition in areas such as search and search advertising – where advertisers pay to place an advert in a user’s search result – can unlock opportunities for businesses and drive investment across the UK economy.

“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,” he said. “Having taken into account the feedback received following our proposed decision, we have today designated Google’s search services with strategic market status.”

Oliver Bethell, the senior director for competition at Google, said the move could endanger UK users’ access to new products and services.

“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,” he said.

skip past newsletter promotion

Sign up to Business Today

Get set for the working day – we’ll point you to all the business news and analysis you need every morning

Privacy Notice: Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.

Tom Smith, a competition lawyer at Geradin Partners and former CMA legal director, said there is a strong case for taking on Google.

“There is a very well-established case for removing some of the market distortions caused by Google’s monopoly position. The US and the EU are already doing this. Today’s decision means that the CMA now has the legal ability to follow suit,” he said.

In a separate investigation, the CMA is deciding whether Apple and Google’s mobile phone platforms should be designated as having SMS under the new digital regulatory regime, which was brought in under the Digital Markets, Competition and Consumers Act 2024.