Google has warned the UK against imposing “onerous” and costly regulations after the competition watchdog ruled it had “strategic market status” for its search services.

The Competition and Markets Authority (CMA) said legal tests had been met to designate Google with the status in general search and search advertising services due to “substantial and entrenched market power”, with more than 90% of searches in the UK taking place on its platform.

The designation gives the CMA greater control on how Google operates its UK services.

The regulator said the Alphabet-owned firm’s Gemini AI assistant was not in the scope of the designation but other AI functionality, including AI Overviews, were.

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It launched the inquiry in January after new powers came into force and had previously flagged the finding in a provisional decision.

The CMA said the legislation allowed proportionate action to “improve competition in digital markets, helping to drive innovation, investment and growth across the UK economy”.

It added that it would begin consultations on possible remedies soon.

What could happen?

These could include demanding changes to its search engine in the UK, including through so-called “choice screens”, and giving publishers more power.

Any action could risk a row with the government, as ministers seek a “growth first” agenda within the country’s regulatory bodies.

Will Hayter, executive director for digital markets at the CMA, said: “By promoting competition in digital markets like search and search advertising we can unlock opportunities for businesses big and small to support innovation and growth, driving 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.”

Google responded by arguing that the designation risked unintended consequences such as price rises and hits to innovation and growth.

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Its senior director for competition, Oliver Bethell, said: “The UK enjoys access to the latest products and services before other countries because it has so far avoided costly restrictions on popular services, such as search.

“Retaining this position means avoiding unduly onerous regulations and learning from the negative results seen in other jurisdictions, which have cost businesses an estimated 114 billion euros (£99.2 billion).

“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.

“Others pose direct harm to businesses, with some warning that they may be forced to raise prices for customers.”

Messaging platform Discord has said the official ID photos of around 70,000 users have been stolen by hackers.

The app, which is popular with gamers and teenagers, said the hackers targeted a firm responsible for verifying the ages of its users. Discord said its own platform was not breached.

The stolen data could include personal information, partial credit card numbers and messages with Discord’s customer service agents, the firm said.

No full credit card details, passwords or messages and activity beyond conversations with Discord customer support were leaked, it added.

Discord said it had revoked the third-party service’s access and was continuing to investigate. It said all affected users have been contacted.

“Looking ahead, we recommend impacted users stay alert when receiving messages or other communication that may seem suspicious,” it said.

Until recently, a hack like this could not have happened, because companies had no need to process and collect proofs of age.

Now, so many governments are following the UK and introducing age verification for unsuitable or pornographic content that a company like Discord has to roll out age checks for a decent portion of its 200 million active users.

It’s a bit like the way that shops have to check your age if you’re buying alcohol – only because it’s online, it comes with a lot of additional complications.

A shop, for instance, won’t keep a copy of your passport once they’ve checked your age.

And it definitely won’t keep it in a massive (yet strangely light) safe along with thousands of other passport photocopies, stored right by its front door, ready to be taken.

Online, it’s surprisingly easy to do just that.

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It’s worth noting that the age verification system used by Discord wasn’t hacked itself. That system asked people to take a photo of themselves, then used software to estimate their age. Once the check was complete, the image was immediately deleted.

The problem came with the appeals part of the process, which was supplied to Discord by an as-yet-unnamed third party.

If someone thought that the age verification system had wrongly barred them from Discord they could send in a picture of their ID to prove their age. This collection of images was hacked. As a result, Discord says, more than 70,000 IDs are now in the possession of hackers.

(The hackers themselves claim that the number is much bigger – 2,185,151 photos. Discord says this is wrong and the hackers are simply trying to extort money. It’s a messy situation.)

There are ways to make age verification safer. Companies could stop storing photo ID, for instance (although then it would be impossible to know for sure if their checks were correct).

And advocates of ID cards will point out that a proper government ID could avoid the need to send pictures of your passport simply to prove your age. You’d use your digital ID instead, which would stay safely on your device.

But the best way to stop data being hacked is not to collect it in the first place.

We’re at the start of a defining test – can governments actually police the internet? Or will the measures that are supposed to make us safer actually end up making us less secure?

Customers of five water firms are facing higher than expected rises to their inflation-busting bills after the companies disputed limits imposed by the industry regulator.

The Competition and Markets Authority (CMA) was called in to review Ofwat’s determinations on what Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water could charge customers from 2025-30.

The CMA’s panel said on Thursday: “The group has provisionally decided to allow 21% – an additional £556m in revenue – of the total £2.7bn the five firms requested.

“This extra funding is expected to result in an average increase of 3% in bills for customers of the disputing companies, which is in addition to the 24% increase for customers of these companies expected as part of Ofwat’s original determination.”

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The decision showed that Wessex household and business customers faced the largest increase – on top of the rise agreed by Ofwat – of 5%, leaving their average annual bills at £622.

South East and Southern customers will see rises of 4% and 3% respectively while Anglian and Northumbrian’s are set to soak up the lowest percentage increase of just 1%.

South East had sought the biggest increase – 18% on top of the 18% hike it had been granted over the five-year period.

The companies exercised their right to an appeal after Ofwat released its final determinations on what they could charge at the end of last year.

They essentially argued that they could not meet their regulatory requirements under the controls amid a rush to bolster crucial infrastructure including storm drains, water pipelines and storage capacity.

Crisis-hit Thames Water was initially among them but it later withdrew its objection pending the outcome of ongoing efforts to secure its financial future through a change of ownership.

Chair of the CMA’s independent panel, Kirstin Baker, said: “We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified.

“We understand the real pressure on household budgets and have worked to keep increases to a minimum, while still ensuring there is funding to deliver essential improvements at reasonable cost.”

Ofwat, which has faced industry criticism in the past for an emphasis on keeping bills low at the expense of investment, is set to be replaced by a new super regulator under plans confirmed in the summer.

It has faced outrage on many fronts, especially over sewage spills, and allowing rewards for failure.

Water Minister Emma Hardy said in response to the CMA’s decision: “I understand the public’s anger over bill rises – that’s why I expect every water company to offer proper support to anyone struggling to pay.

“We’ve made sure that investment cash goes into infrastructure upgrades, not bonuses, and we’re creating a tough new regulator to clean up our waterways and restore trust in the system.

“We are laser focused on helping ease the cost of living pressure on households: we’ve frozen fuel duty, raised the minimum wage and pensions and brought down mortgage rates – putting more money in people’s pockets.”