A UK investigation is being set up as the competition watchdog looks into tech group Google about whether its dominant position in online search services is adversely affecting consumers, businesses and rivals, writes David Connett.

The Competition and Markets Authority (CMA) said it will use new digital powers for the first time to examine whether Google is "delivering good outcomes for people and businesses in the UK".

"Millions of people and businesses rely on Google's search and advertising services - with 90 per cent of searches happening on their platform and more than 200,000 UK businesses advertising there," Sarah Cardell, of the CMA, said.

"It's our job to ensure people get the full benefit of choice and innovation in search services and get a fair deal."

The watchdog said effective competition could keep down business costs for search advertising, equivalent to nearly £500 per household per year, in turn lowering prices across the economy.

Under the new digital markets competition rules, which came into effect at the start of the year, the CMA could require Google to meet specific conduct requirements or pro-competition interventions.

The CMA said its inquiry would take feedback from other stakeholders, as well as evidence from Google, before reaching a decision by October.

The tech group said: "People across the UK trust Google Search to help them find what they need. We support millions of UK businesses to grow by reaching customers in innovative ways."

Google said it will engage with the CMA, and lay out how its services benefit consumers and businesses as well as the "trade-offs inherent in any new regulations".

Oliver Bethell, Google's competition director, said: "Digital services like Search will power new economic development in the UK.

"We welcome the recognition of the need to align regulatory decisions with the Government's growth mission."

Urging a pro-innovation, evidence-based regime, Bethell said "overly prescriptive digital competition rules would end up stifling choice and opportunity for consumers and businesses".

In November the US Department of Justice said Google must sell its Chrome browser, share data and search results with rivals, and take other measures to end what they called its monopoly on online search.

The CMA will determine whether Google has "strategic market status", which lasts for a five-year period. It means companies can be fined up to 10 per cent of global turnover for breaching any conduct rules.