* Landmark case may set EU tone for U.S. tech groups
* Google says innovation core of its business model
* Clear case of dominant company abusing power -EU regulators
* EU antitrust chief mulls rules to rein in tech companies (Adds comments from court hearing)
By Foo Yun Chee
LUXEMBOURG, Feb 12 (Reuters) - Google defended its business model on Wednesday, saying that making innovative products was at its core rather than helping rivals, as it sought to overturn a 2.4-billion-euro ($2.6 billion) EU antitrust fine at Europe's second-highest court.
The legal fight comes as European Competition Commissioner Margrethe Vestager gears up to take on U.S. tech giants and Chinese companies with legislation in the coming months, on top of ongoing antitrust investigations.
"Competition law does not require Google to hold back innovation or compromise its quality to accommodate rivals. Otherwise, competition would be restricted and innovation would be stifled," the company's lawyer Thomas Graf told a panel of five judges on the first of a three-day hearing at the General Court.
"The decision's case is, at its core, that Google should not have introduced these innovations, unless it gave competing CSSs (comparison shopping services) the same access," Graf said, laying out the arguments for the world's most popular internet search engine in a decade-long battle with the European Commission over its business practices.
The company did not favour its own service but competed on its merits, he said.
The EU competition enforcer handed the fine to Google in 2017 for favouring its own price-comparison shopping service against those of smaller European rivals.
Two further decisions for different issues since then have lifted the total penalty to 8.25 billion euros, four times more than Microsoft's EU fines of 2.2 billion euros.
Commission lawyer Nicholas Khan swatted away Google's arguments, saying this was a clear case of a company using its dominance to give itself an advantage in other markets.
"What Google engaged in was leveraging conduct of the type found to be abusive many times under EU competition law. Conceptually, there is nothing esoteric about this case," he told the judges.
He criticised Google for cherry picking elements of the EU decision to challenge.
"It is as if Google has applied a ranking algorithm to the decision and decided that parts of it just aren't relevant," Khan said.
Lawyer Thomas Vinje for British price-comparison shopping service Foundem, whose complaint triggered the EU investigation, said Google's product would never have gained prominence if Google had treated it the same way as rival products.
"But instead of being prone to being demoted, Google's comparison-shopping service is systematically promoted to the most visible spots in Google's search results," he said.
Tech lobbying group CCIA, which backs Google, said enforcers should be careful they do not nip innovation in the bud.
"There will be less innovation, and a worse outcome for consumers, if tech companies are disincentivized from improving their websites or adding new features," CCIA lawyer James Killick said.
Judges will rule in the coming months.
The case is T-612/17 Google and Alphabet v Commission.
$1 = 0.9164 euros Reporting by Foo Yun Chee; Editing by Jane Merriman and Bernadette Baum