Google's threat escalates a battle with publishers such as News Corp that is being closely watched around the world. Australia is on course to pass laws that would make tech giants negotiate payments with local publishers and broadcasters for content included in search results or news feeds. If they cannot strike a deal, a government-appointed arbitrator will decide the price.
"Coupled with the unmanageable financial and operational risk if this version of the Code were to become law, it would give us no real choice but to stop making Google Search available in Australia," Mel Silva, managing director for Australia and New Zealand, told a senate committee.
Google's comments drew a sharp rebuke from Australian Prime Minister Scott Morrison who said the country makes its rules for "things you can do in Australia."
"People who want to work with that in Australia, you're very welcome. But we don't respond to threats," Morrison told reporters.
Google has called the code overly broad and said that without revisions, offering even a limited search tool would be too risky. The United States government this week asked Australia to scrap the proposed laws and suggested Australia should pursue a voluntary code instead.