Google wants to maintain a huge digital library that could be a money-spinner if people take to e-books and readers. (Mark Lennihan/Associated Press)

A federal judge in New York City has rejected a deal between Google Inc. and lawyers for authors and publishers that would have let the gigantic search engine preside over the world's largest digital library.

U.S. Circuit Judge Denny Chin said the creation of a universal library would benefit many but would "simply go too far."

He said the settlement of a class-action lawsuit that the company reached with U.S. authors and publishers would "grant Google significant rights to exploit entire books, without permission of the copyright owners."

Chin said the deal gives Google "a significant advantage over competitors."

He said it would be "rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case."

The U.S. Justice Department issued a decision last February discouraging the deal with authors and publishers, saying it would stifle competition.

Google proposes taking the digital rights to millions of hard-to-find books, including books whose authors cannot be found.

Many individual authors have opposed the Google book settlement signed by the U.S. Authors Guild.