By Foo Yun Chee
LUXEMBOURG (Reuters) - Google suffered one of its biggest setbacks on Wednesday when a top European court upheld a ruling that it broke competition rules and fined it a record 4.1 billion euros, in a move that may encourage other regulators to ratchet up pressure on the U.S. giant.
The unit of U.S. tech giant Alphabet had challenged an EU antitrust ruling, but the decision was broadly upheld by Europe's General Court, with the fine trimmed modestly to 4.125 billion euros ($4.13 billion) from 4.34 billion euros.
Even with the reduction, it was still a record fine for an antitrust violation. The EU antitrust enforcer has fined the world's most popular internet search engine a total of 8.25 billion euros in three investigations stretching back more than a decade.
The judgment is set to boost landmark rules aimed at curbing the power of U.S. tech giants that will go into effect next year.
"The judgment strengthens the hand of the Commission. It confirms the Commission can use antitrust proceedings as a backstop threat to enforce rapid compliance with digital regulation also known as the DMA," said Nicolas Petit, professor at European University Institute.
EU antitrust chief Margrethe Vestager did not mince her words.
"This, of course, is really good. Now, we have the second Google judgment and for us, it is really important as it backs our enforcement efforts," she said. This is the second court defeat for Google which lost its challenge to a 2.42 billion euro ($2.42 billion) fine last year, the first of a trio of cases.
"The General Court largely confirms the Commission's decision that Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine," the court said.
"In order better to reflect the gravity and duration of the infringement, the General Court considers it appropriate however to impose a fine of 4.125 billion euros on Google, its reasoning differing in certain respects from that of the Commission," judges said.
Google, which can appeal on matters of law to the EU Court of Justice, Europe's highest, voiced its disappointment.
"We are disappointed that the Court did not annul the decision in full. Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world," a spokesperson said.
The ruling is a boost for Vestager after the General Court overturned her decisions against Intel and Qualcomm earlier this year.
Vestager has made her crackdown against Big Tech a hallmark of her job, a move which has encouraged regulators in the United States and elsewhere to follow suit.
She is currently investigating Google's digital advertising business, its Jedi Blue ad deal with Meta, Apple's App Store rules, Meta's marketplace and data use and Amazon's online selling and market practices.
The Court agreed with the Commission's assessment that iPhone maker Apple was not in the same market and therefore could not be a competitive constraint against Android.
The court backing could reinforce the EU antitrust watchdog in its investigations into Apple's business practices in the music streaming market, which the regulator says Apple dominates.
FairSearch, whose 2013 complaint triggered the EU case, said the judgment may lead to more competition in the smartphone market.
"This shows the European Commission got it right. Google can no longer impose its will on phone makers. Now they may open their devices to competition in search and other services, allowing consumers to benefit from increased choice," its lawyer Thomas Vinje said.
The Commission in its 2018 decision said Google used Android to cement its dominance in general internet search via payments to large manufacturers and mobile network operators and restrictions.
Google said it acted like countless other businesses and that such payments and agreements help keep Android a free operating system, criticising the EU decision as out of step with the economic reality of mobile software platforms.
The case is T-604/18 Google vs European Commission.
($1 = 1.0002 euros)
(Reporting by Foo Yun Chee; Editing by David Evans and Bernadette Baum)