The UK’s action against Google blurs the lines between traditional market regulation and active industrial innovation policy. The Competition and Market Authority (CMA) is not just trying to fix a broken market; it is actively trying to engineer a more innovative one by backing a new generation of technology.
This is most evident in the regulator’s explicit mention of featuring “AI-powered rivals in the search space, such as Perplexity and ChatGPT” on proposed choice screens. This is not a neutral act of opening a market; it’s a specific endorsement of a particular technological direction and a clear attempt to give a leg up to innovative challengers.
By doing this, the CMA is moving beyond the role of a passive referee and becoming an active participant in shaping the future of the tech landscape. It is effectively using its regulatory power to place a bet on AI startups as the most likely source of disruptive innovation that can challenge the incumbent.
This approach can be seen as a form of “pro-competition industrial policy.” Instead of picking a single national champion, the government is trying to create the market conditions where innovative new companies can emerge and thrive. It’s an attempt to use regulation as a tool to cultivate a more dynamic and forward-looking tech sector.
While Google protests that this will harm its own innovation, the CMA’s subtext is clear: the regulator believes that the UK’s long-term innovation interests are better served by a competitive ecosystem of many companies rather than a market dominated by one.