Google said in a statement that it was possible to withdraw its search engine from Australia because of a proposed media law that would require the company to pay for news content.
Following the news circulating in the Australian Associated Press newspaper that Mel Silva, managing director of Google's Australian operations, said in a Senate inquiry that the law was impractical and that the company was unable to calculate financial risks.
Google's Australian Operations Manager added that leaving the Australian market was "the only rational option if this law is to pass".
If passed, the law would force technology companies to pay news platforms for their content or face fines of up to A$10 million ($7.7 million), according to The Australian. The law will first be applied to Facebook News Feed and Google.
The Australian Competition and Consumer Commission had introduced the law.
The committee's chairman, Rod Sims, told the Senate inquiry that without the news law, the balance of power would be too far in favor of technology companies and would allow them to offer "deals in accordance with the principle of acceptance or rejection".