Alphabet Inc. Class C (GOOGL.US) faces increased scrutiny from the UK's anti-monopoly regulator, becoming the first company in the UK to be designated as having "strategic market status".

Alphabet Inc. Class C (GOOGL.US) under Alphabet has become the first company in the UK to be recognized as having "strategic market status," which subjects its online search and advertising business to more stringent scrutiny by the UK antitrust authorities. The Competition and Markets Authority (CMA) stated that Alphabet Inc. Class C's entrenched market dominance was sufficient to support this recognition, which aims to safeguard the fairness of competition in the digital market. The agency also expressed concerns about the fairness of Alphabet Inc. Class C's search results, high advertising costs, and AI-generated search responses. "We have found that Alphabet Inc. Class C holds a strategic position in the search and search advertising sector - with over 90% of UK search activity occurring on its platform," said Will Hayter, Director of Digital Markets at CMA, in a statement on Friday. CMA noted that the investigation did not cover Alphabet Inc. Class C's Gemini AI assistant, but "given the uncertainty in market developments, this situation will continue to be assessed." This move by the UK to constrain Alphabet Inc. Class C follows multiple rounds of penalties imposed by the EU on the company for its business practices. Last month, the EU announced a fine of nearly 30 billion (approximately $35 billion) on Alphabet Inc. Class C and ordered the search giant to cease favoring its own advertising technology services. US President Donald Trump called the EU's action "extremely unfair" and threatened to impose tariffs. Oliver Bethell, Senior Director of Competition Affairs at Alphabet Inc. Class C, responded to the recognition by CMA, stating that the UK must avoid "expensive restrictive measures" and "overly burdensome regulation." "The intervention proposals put forward in this process may inhibit innovation and growth in the UK, and even delay the launch of products," Bethell said. CMA's recognition was based on stricter rules that came into effect earlier this year in the UK to regulate competition in the digital market. This recognition does not imply that Alphabet Inc. Class C engages in anti-competitive behavior, but it opens up space for future measures (such as enforcement actions, penalties) aimed at reforming Alphabet Inc. Class C's search service operations in the UK. CMA stated that consultations on potential intervention measures may be initiated later this year. The agency had previously indicated that areas of focus in this investigation included: enabling users to choose alternative search service providers and ensuring fairness in website ranking in search results. CMA also stated that it plans to launch a new round of investigations in 2026 to address more concerns, such as Alphabet Inc. Class C's bargaining position with content publishers and issues of control over the search advertising business.