Strategic Market Status, usually shortened to SMS, is the central designation used by the UK's digital markets competition regime. The framework comes from Part 1 of the Digital Markets, Competition and Consumers Act 2024 and has applied since 1 January 2025.
The important point for businesses is that SMS is not a label attached to an entire company. The Competition and Markets Authority designates a firm in relation to a particular digital activity. That means the legal analysis is narrower than saying a large technology company is regulated simply because of its overall size.
What the CMA has to establish
The CMA must assess whether the firm has substantial and entrenched market power in the relevant digital activity and whether it holds a position of strategic significance. The regime is therefore designed for a small number of powerful digital activities rather than for the technology sector generally.
An SMS investigation follows a statutory process and gives the firm and third parties opportunities to provide evidence. The CMA's guidance explains how it considers market power, competitive constraints, future developments and strategic significance when reaching a decision.
What happens after an SMS designation
Designation does not by itself impose one universal code of conduct. Instead, the CMA can set conduct requirements tailored to the designated activity. These can address how the firm treats users, businesses, rivals or data where the CMA considers intervention necessary to support fair dealing, open choices, or trust and transparency.
The CMA can also investigate whether features of a digital activity create an adverse effect on competition and can impose a pro-competition intervention. That gives the regime a structural tool as well as behavioural rules.
Why the regime matters beyond the designated firms
The practical effects can reach publishers, software companies, app developers, advertisers, merchants and other businesses that depend on a designated platform. A conduct requirement affecting ranking, interoperability, data access or commercial terms can change the economics of an entire ecosystem.
For companies operating around major digital platforms, the sensible compliance and strategy question is therefore not simply whether they themselves can be designated. It is whether a supplier, distribution channel or customer relationship depends on a digital activity that is under an SMS investigation or subject to CMA measures.
| Stage | What it means |
|---|---|
| SMS investigation | CMA assesses a specific digital activity |
| Designation | Firm meets statutory market-power and strategic-significance tests |
| Conduct requirements | Tailored rules can be imposed on the designated activity |
| Pro-competition intervention | CMA can address an adverse effect on competition |
Frequently asked questions
Does Strategic Market Status apply to a whole company?
No. SMS designation applies in relation to a specific digital activity identified by the CMA.
Who decides Strategic Market Status in the UK?
The Competition and Markets Authority conducts the investigation and makes the designation decision under the DMCC Act.