In the first investigation conducted under the new ex-ante regulatory framework established by the Digital Markets, Competition and Consumers Act (DMCC), the United Kingdom’s Competition and Markets Authority (CMA) is seeking to ascertain whether Google has “strategic market status” (SMS) in the search and search-advertising-services markets. The CMA is also tasked with weighing whether ex-ante remedies are needed to address potential anticompetitive harm caused by Google’s position.
In conducting this analysis, the CMA should build on other jurisdictions’ experience. The authority must carefully distinguish between conduct that is genuinely anticompetitive and harmful to consumers and conduct that—while not anticompetitive or harmful—conflicts with the CMA’s vision of how the online search market should be structured.
In defining the boundaries between “fair” and “unfair” or “informed” and “uninformed” choices, as well as between “competitive” and “anticompetitive” conduct, the CMA confronts a pivotal question: does it seek to enable market-driven outcomes or does it intend to impose its own? While it’s likely premature to assess the effectiveness of those interventions taken by other jurisdictions, the experience to-date does offer some clues as to where the line between regulators’ ambitions and consumer interests should be drawn.
Self-Preferencing
Among the biggest promises made by drafters of the EU’s Digital Markets Act (DMA) was the law’s proposed ban on so-called “self-preferencing” by major digital platforms. In practice, however, the ban has proven to make it increasingly difficult for platforms to offer certain functionalities in Europe. For example, Google has been forced to remove features like maps, hotels bookings, and reviews from its search results. Until it can accommodate competitors who offer similar services (if this is even possible), these specialized search results will remain buried several clicks away from users’ general searches. Not only is this inconvenient for consumers, but it has important ramifications for business users.
Take hotel bookings, for example. Early estimates suggest that the DMA is responsible for a 17.6% drop in the number of clicks from Google ads to hotel websites. DMA implementation also contributed to a 30% decline in clicks and bookings on Google Hotel Ads. As a result, the volume of direct bookings fell by as much as 36%, thereby “increasing hotel dependence on intermediaries, which seriously damages their profitability.” In other words: while other digital intermediaries may benefit from the self-preferencing ban, hotels lose out. In turn, it’s not at all clear that there is any cognizable sense in which this intervention benefits consumers.
By prohibiting Google from placing search results from its own vertical services (Google Maps, Google Flights, and Google Hotel Ads) first, the hotel-industry consultant Mirai notes: “the presentation of hotel offers to users based in DMA markets is less organised, clear and intuitive.” Google’s search results previously displayed links to hotels directly, featuring relevant details like prices, distance from the user, and images.
Now, as the figure below demonstrates, the top search results instead point to intermediaries like Booking.com and eDreams. The irony of these lost clicks being redirected to intermediaries like online travel agencies, of course, is that Booking.com is, itself, a designated “gatekeeper” under the DMA.
Post-DMA Google Search for Madrid Hotels
This sort of regulatory intervention does not make the market more “fair or contestable.” It merely robs Peter to pay Paul, while also robbing the consumer. As Mirai finds:
Prior to DMA, Google’s taxonomy of results was the result of decades of effort by the company to refine its results in order to provide an optimized search experience that would connect supply and demand in a way that was ideal for both.
This pre-DMA search experience offered hotels participating directly in the Google Hotel Ads product, the option to present their inventory (availability and room rates) in a way that was both efficient from the standpoint of distribution cost, and enriched for the user, as it integrated the experience of other services, e.g. Google Maps. This way of presenting information was clear, relevant and intuitive, and maximized purchasing decisions such as hotel bookings for those users who were so inclined.
Google has also removed other functionalities to comply with Art. 6(5) DMA. In March 2024, the company announced that it had “removed some features from the search results page which help consumers find businesses, such as the Google Flights unit.” Google warned “other countries contemplating such rules to consider the potential adverse consequences — including those for the small businesses that don’t have a voice in the regulatory process.”
As Joshua Wright observed more than a decade ago, the notion that the ability to give preferential treatment to one’s products is inherently anticompetitive contradicts “over a century of antitrust jurisprudence, economic study, and enforcement agency practice” that have firmly established that “the competitive effects of a vertically integrated firm’s ‘discrimination’ in favor of its own products or services… generally produce significant benefits for consumers”.
It is also flatly contrary to a number of empirical studies showing that even the welfare of competitors (to say nothing of consumers) may be improved by such self-preferencing (see here and here). While enforcing such provisions may benefit certain competitors (e.g., Booking.com or Expedia) in the short run, over the longer term, such rules may inefficiently insure them against their own business misjudgments, thereby creating perverse incentives to underinvest in ensuring their own viability. In addition, making Google’s search results less relevant—and, therefore, less attractive to users—is likely to negatively affect small businesses who use Google to reach a wide, previously unimaginable audience.
Is this a tradeoff that the CMA wishes to make? Further, is it a tradeoff that it is empowered to make under the Competition Act and the DMCC?
Choice Screens
Even before the DMA took effect, Android devices were required to offer choice screens in the EU. Despite this regulatory mandate, when faced with an affirmative choice of search engines, EU consumers overwhelmingly stuck with Google. In fact, Google’s share of the general search market has remained largely unchanged since the introduction of choice screens, and still hovers around 91%.
The same cannot be said for other default services. In the United States, for example, Microsoft preloads its Edge browser and Bing search engine on Windows computers, yet Bing continues to trail far behind Google in U.S. desktop search. This suggests that consumers, including those who aren’t particularly tech-savvy, are willing and able to switch search engines if they choose. Simply put, Google’s dominance stems from consumer preference, not just default settings.
It does appear that choice screens have led to a small increase in the shares of rival search engines like DuckDuckGo and Bing. Since the Google Android decision, Google has lost about 5.6% market share in the EU, with significant variations across member states. But some of the search engines that have benefitted license their results from Google and Bing.
So, what have the choice screens actually achieved? Perhaps funneling some of Google’s advertising revenue to “small” competitors like Bing, or smaller ones still like Ecosia and DuckDuckGo. But is this marginal redistribution of wealth worth the inconvenience inflicted on consumers? In addition, the change—however small—could affect businesses that have invested in optimizing their websites for Google’s search engine, not DuckDuckGo’s or Bing’s.
As for browsers, the DMA has given rivals significant installation jumps, including as much as a 164% increase for Opera and a 250% increase for Aloha. But was this due to the choice screens or to the fanfare surrounding the DMA? Even with the examples of Opera and Aloha’s growing market share, does this confirm the European Commission’s supposition that users demand to be freed from the shackles of default settings, or merely that “mandated nagware” will inevitably drive some to try alternatives? The important question is: will users continue to stick to these services, or eventually return to the familiar market leaders? And what conclusions will regulators draw from these changes?
In the end, it appears that many consumers prefer a default—a highly functioning and simple package out-of-the-box. The CMA must thus interrogate the extent to which it would make a difference if UK devices came with choice screens. If only a very small percentage of users at the margin were to switch (say, to the first-listed option on the choice screen), would that make a significant competitive difference? Would it help the average consumer?
In accordance with the DMCC’s S.19(5), the CMA is obligated to impose conduct requirements that are proportionate and beneficial to consumers (see also S.19(10) and S.21(b)(i)). There is, however, scant evidence to suggest that consumers actively seek choice screens, no matter how much it appears to be regulators’ preferred option. Ultimately, regulators are mandated to safeguard consumers’ interests, not their own.
The US District Court’s Decision in Google Search
The CMA notes that the recent Google Search decision by the U.S. District Court for the District of Columbia “found that Google had acted illegally to maintain its monopoly position in the markets for ‘general search services’ and ‘general search text advertising’ in the US.” But as Geoffrey Manne and Mario Zúñiga have pointed out, the significance of these findings should be put into the appropriate context.
First, the court’s monopoly finding isn’t surprising, or even particularly telling. Google has long held an extremely large share of general search in the United States. But as the U.S. Court of Appeals for the D.C. Circuit held in the watershed 2001 Microsoft decision, “merely possessing monopoly power is not itself an antitrust violation.” Rather, a plaintiff must also prove exclusionary conduct—a much taller order.
Second, just because a court determined that Google has monopoly power in search does not mean another court will agree it has monopoly power in online advertising or other markets.
Third, the Google Search decision is fundamentally flawed. The U.S. case concerns Google’s agreements to pre-load Google as the default search engine in internet browsers and on mobile devices. According to the U.S. Justice Department (DOJ), these agreements excluded Microsoft Bing (and other general search engines) from effectively competing because users rarely switch from the default.
There is, however, another explanation for Bing’s lack of success: maybe it just wasn’t as good. The court does not rule this out or show that Bing would have succeeded without Google’s deals. The court’s failure to thoroughly consider consumer preference as a factor in Bing’s lack of success raises concerns that the CMA should seek not to replicate.
As Manne has discussed extensively elsewhere, the court’s legal conclusion that the DOJ didn’t need to prove that the agreements were the cause of Google success rests on a misinterpretation of the Microsoft decision. To prevail, the government should have been required to prove that Google’s default-distribution deals genuinely excluded Bing from the market to the detriment of consumers.
Moreover, these default agreements are not exclusive, and users can and do switch to other search engines with relative ease. The real question is why users often choose not to switch. Is it due to the so-called “power of defaults,” or is it simply because they prefer Google’s service? Evidence points toward the latter.
If consumer preference is, indeed, the primary reason for Google’s dominance, then the court’s decision may inadvertently hinder users from accessing their preferred services—a counterproductive outcome. This scenario underscores the importance of thoroughly understanding market dynamics before implementing regulatory interventions.
The U.S. court’s conclusion appears rooted in a presumption that large tech firms cannot become dominant simply by being better. Indeed, this same assumption permeates much of the emerging antipathy toward so-called “big tech.” Efforts to ban similar types of conduct (like Apple integrating iMessage with iPhones or Google self-preferencing its maps in its search results) without proof of harm to consumers risk stifling innovation and disregarding consumer preferences. The CMA should not tread this path without concrete evidence that consumers are harmed by existing practices.
Requirements to Obtain User Consent for Data
Under the DMA, Google is required to obtain explicit user consent before combining data across its services; it also must share anonymized data with competitors. Evidence shows that these measures hamper the personalization and effectiveness of services such as search results, recommendations, and targeted advertising.
Take the EU’s General Data Protection Regulation (GDPR), for example. The impact of the GDPR became evident when platforms like Google and Facebook struggled to obtain consent for personalized ads, resulting in less data collection. This led to a decrease in ad revenue, as advertisers found non-targeted ads to be both less effective and less profitable. A conduct requirement under the DMCC along these lines could have similar consequences, as forced segregation of data into “siloes” reduces platforms’ ability to offer seamless experiences and personalized services.
If Google were to show less-personalized ads to UK consumers, it wouldn’t necessarily mean that it would show fewer ads. It would still show ads, just less-relevant ones. This would be a mistake. Personalized ads drive sales. Small businesses, especially, rely on targeted advertising to reach consumers with more relevant information in the most cost-effective way. Targeted advertising also benefits consumers by specifically tailoring ads to match their interests (they’re going to see ads anyway; they might as well be relevant). As one startup founder in the EU put it:
Targeted advertising is the main tool that allows a startup to validate its value proposition and get into a market at low cost, optimising marketing expenses that – at initial stages – must be super efficient. Any limitation would be a barrier to market entry for new players in the economy, which could pose a direct challenge to the entire startup ecosystem, and would result in favour of incumbents and established companies that are protected from challenges by the legislator.
Measures Relating to News-Publisher Remuneration
The CMA points out that “several jurisdictions have imposed measures with the aim of ensuring that news publishers receive fair payment terms for their content, including the News Media Bargaining Code in Australia and the Online News Act in Canada.”
In Canada, the Online News Act resulted in Meta banning all news from its platform—significantly disrupting the media landscape. Canadian news outlets experienced a sharp decline in online traffic, engagement, and revenue, with some losing 85% of engagement on Facebook and Instagram. The ban led to a 43% overall drop in engagement and a reduction of 11 million daily views. Smaller outlets, especially those that rely heavily on social-media platforms, were hit hardest, with many seeing traffic plummeting by 50%.
The ban also affected non-news outlets, like university radio stations, which lost their social-media presence, hindering their ability to engage with audiences and secure funding. Rural and First Nations communities faced particular challenges from the loss of Facebook as a primary news source.
Meta also restricted sharing and viewing news content on Facebook in Australia in response to the proposed News Media Bargaining Code. This led to a significant reduction in news consumption on the platform. One study found that, while some users sought alternative news sources, others experienced a decline in news consumption, potentially increasing exposure to misinformation. The Independent Media Alliance opined that the ban would be “terrible for not only the industry, but for Australian democracy.”
While Facebook eventually reversed the ban and reached a deal that allowed news sharing to resume, the situation had significant ramifications. Larger publishers negotiated deals for compensation from Facebook, but smaller news outlets faced sunk revenue losses. At the same time, Facebook has not reversed its ban in Canada. Thus, even in the Australian “best case” scenario, an agreement was reached only after painstaking negotiations and irreversible losses for smaller outlets.
As for Google, while it has shown more willingness to negotiate, this comes with a caveat. In Australia, Google agreed to pay news companies only after intense negotiations, similarly to Meta. Ultimately, Google secured terms more favorable to its business model. It negotiated payments on a case-by-case basis, rather than a fixed payment model with a common price across the board. While gigantic companies like Australia’s own News Corp can afford these transaction costs, smaller outlets may not. Google was also able to pick which content to display—and pay for—on its platform. Put simply, if you turn Google into a news buyer, it will shop around.
Ultimately, major media companies with significant bargaining power like News Corp and Nine Entertainment were the main beneficiaries of the agreements made under the News Media Bargaining Code. These large publishers offered more varied content that was valuable to Google because it attracted a larger audience and thus increased ad revenue. In addition, large publishers were able to command higher payments, making them more likely to receive favorable treatment in terms of visibility on Google’s platform. Conversely, smaller or independent news outlets that did not strike agreements with Google risked being excluded from Google’s news services or search results, or receiving much less exposure than they would have in a but-for world.
It is unclear how the overrepresentation of news from large corporations like News Corp and the underrepresentation of small, independent outlets benefits consumers, the market, or democracy.
Conclusion
As it investigates Google Search and considers remedies, the CMA can draw key lessons from international experience. The EU’s DMA shows that banning self-preferencing can degrade search quality and increase reliance on intermediaries. Choice screens have had little impact—suggesting that, while defaults matter, consumer preference matters more. The U.S. Google Search ruling underscores the risk of conflating dominance and success with anti-competitiveness. Data restrictions could undermine personalization and ad efficiency, while media-remuneration mandates have backfired—benefiting powerful legacy industries at the expense of news access.
The CMA must ensure its interventions genuinely serve consumers, rather than merely redistributing power and rents among competitors. This is not just good economic policy; under the DMCC, it is now a legal obligation.