Google has threatened to remove its search engine from Australia over the nation's attempt to make the tech giant share royalties with news publishers.
Australia is introducing a world-first law to make Google, Facebook and potentially other tech companies pay media outlets for their news content.
But the US firms have fought back, warning the law would make them withdraw some of their services.
Australian PM Scott Morrison said lawmakers would not yield to "threats".
Australia is far from Google's largest market, but the proposed news code is seen as a possible global test case for how governments could seek to regulate big tech firms.
Tech firms have faced increasing pressure to pay for news content in other countries, including France, where Google struck a landmark deal with media outlets on Thursday.
In Australia, the proposed news code would tie Google and Facebook to mediated negotiations with publishers over the value of news content, if no agreement could be reached first.
Google Australia managing director Mel Silva told a Senate hearing on Friday that the laws were "unworkable".
"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," she said.
Why is Australia pushing this law?
Google is the dominant search engine in Australia and has been described by the government as a near-essential utility, with little market competition.
The government has argued that because the tech platforms gain customers from people who want to read the news, the tech giants should pay newsrooms a "fair" amount for their journalism.
In addition, it has argued that the financial support is needed for Australia's embattled news industry because a strong media is vital to democracy.
Media companies, including News Corp Australia, a unit of Rupert Murdoch's media empire, have lobbied hard for the government to force tech firms to the negotiating table amid a long-term decline in advertising revenue.
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