Google has agreed to do more to identify and remove fake reviews, including sanctioning rogue individuals and UK businesses that have manipulated their star ratings, the UK’s competition watchdog has said.

The tech company will also issue “warning” alerts on the profiles of businesses that use fake reviews to boost their ratings, the Competition and Markets Authority (CMA) said.

The agreement comes after the CMA launched an investigation into Google in 2021 over concerns it may have breached consumer law by failing to take sufficient action to protect people from fraudulent reviews on its platforms. The watchdog began a similar investigation into Amazon in 2021 which is ongoing.

Each year as much as £23bn of UK consumer spending is potentially influenced by online reviews, according to the CMA.

Research by the consumer group Which? has shown that as many as 89% of consumers use online customer reviews when researching a product or service.

Sarah Cardell, the chief executive of the CMA, said Google is “leading the way” when it comes to tackling fake reviews.

She said: “Left unchecked, fake reviews damage people’s trust and leave businesses who do the right thing at a disadvantage.

“The changes we’ve secured from Google ensure robust processes are in place, so people can have confidence in reviews and make the best possible choices.

She added: “This is a matter of fairness – for both business and consumers – and we encourage the entire sector to take note.”

The watchdog said that any business that publishes reviews should examine Google’s changes to see whether their own practices should be altered, adding that failure to do so could lead to an investigation and possible fine.

Google must report to the CMA over a three-year period to ensure it is complying with the changes it has agreed.

From April, the CMA will have stronger powers, allowing it to decide independently whether consumer law has been broken without taking a case to court. Companies that breach the new regime could face a fine representing up to 10% of their global turnover.

The watchdog has been ramping up its scrutiny of big tech, and this month launched two investigations, one targeting Google’s search and advertising practices and another Apple and Google’s mobile platforms.

But the appointment of Doug Gurr, a former Amazon executive, as the watchdog’s new interim chair forced the business minister, Justin Madders, to deny the government was “in the pocket of big tech”.

A Google spokesperson said: “Our longstanding investments to combat fraudulent content help us block millions of fake reviews yearly – often before they ever get published. Our work with regulators around the world, including the CMA, is part of our ongoing efforts to fight fake content and bad actors.”