UK politics blunts antitrust action against Google
LONDON, June 25 (Reuters) - Britain's competition regulator has finally come up with a plan to control Google's huge search business, but a shift in the political wind in favour of big tech and the money it invests makes it more of a bark than a bite.
The Competition and Markets Authority spent years setting up a regime to intervene in the operations of tech giants such as Google, Apple and Amazon, saying it needed special expertise and powers to drive competition in the digital economy.
But just as it received new powers, Britain's Labour government said its need to grow the economy meant tough regulation was now out.
The CMA, chaired by a former Amazon executive, has touted a targeted approach as the way to meet its goal of reining in big tech without throttling investment from an industry that has spent tens of billions of pounds in Britain.
On Tuesday, it proposed designating Google (GOOGL.O), opens new tab as having "strategic market status" in search, giving it the power to impose conditions on the U.S. tech firm such as changing the way it ranks search results or offering users more choice.
Competition experts said the designation was no surprise, coming long after similar moves in the United States and the European Union.
"Everyone has been at the search rodeo for years, there are EC (European Commission) decisions, U.S. judgements," Cristina Caffarra, a competition economist, said. "What the CMA is doing is purely performative."
Nonetheless, the CMA's first designation is being closely watched by tech groups, lawyers, and business owners to see how it operates in the new political climate.
In announcing its proposals, CMA Chief Executive Sarah Cardell was careful to stress its "targeted and proportionate actions" to regulate a sector innovating at breakneck speed via artificial intelligence, and mindful of the political pressure.
Lawyer Ronan Scanlan, a partner at Steptoe International and former deputy director at the CMA, said Britain's Digital Markets, Competition and Consumers Act gave the CMA broad powers, but in practice it didn't have the political capital to make grand interventions.
"The DMCC Act, which was billed as this revolutionary new tool that the CMA could wield, has arrived three years too late and is becoming a bit of an albatross around its neck," he said.
"It's up against huge players like Google, Apple, Amazon, with a lot of political connections, and now - in a new political reality - somehow has to try to extricate itself with the minimum amount of damage."
The CMA's delicate balancing act is made harder by U.S. President Donald Trump's muscular defence of U.S. business interests, and Scanlan said the regulator would want to see what would happen with Google there.
Some of the measures the CMA is proposing, such as choice screens for consumers to easily opt for alternative search engines, have been around for decades.
Others, such as changing the ranking of results to limit Google favouring its own services, could have more impact if they are confirmed in the CMA's final decision in October.
Tom Smith, a competition lawyer at Geradin Partners and a former CMA legal director, said there was a question mark over political support for some of the regulator's tougher proposals, but thought it was trying to stick to its guns.
"Given the new context, it's still implementing the regime properly," he said, adding that the U.S. Department of Justice had proposed measures that could lead to a breakup of Google, particularly in its search and advertising businesses.
"The idea that the CMA is going too far by putting in a choice screen, it's quite ludicrous."
Despite that, Alphabet-owned Google warned it may not bring new features and services to Britain if the regulator goes ahead with the proposals, and said "proportionate, evidence-based regulation" was needed if Britain was to grow its economy.
Google, which employs around 7,000 people in Britain, accounts for more than 90% of all general search queries in the country, with more than 200,000 businesses relying on its search advertising to reach their customers.
But according to submissions to the CMA from the likes of flights and hotel website Skyscanner and the recommendation platform Checkatrade, that dominance may have enabled it to favour its own services over their offerings, and they want regulatory intervention.
Silicon Valley has been wary of the CMA since 2023, when it blocked Microsoft's $69 billion acquisition of the "Call of Duty" maker Activision-Blizzard. Having sparked fury from the U.S. companies, it then tore up its own rule book to approve the case after Microsoft made some changes.
Its second investigation under its new powers is examining mobile operating systems, targeting Google and Apple.
Previous CMA investigations had pointed to Amazon as the subject of the third strategic market status investigation that was due to be announced this summer. On Tuesday, however, the CMA pushed the third case back to next year.
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