Google has threatened to make its search function unavailable in Australia if the country follows through on a law requiring it to pay for news content.
The tech giant's managing director for Australia, Mel Silva, told the Senate it would "have no choice" but to pull out of the Australian market should the government push ahead with plans to charge digital platforms for the news articles they host.
Fellow tech giant Facebook also reiterated its threat to ban Australian news content on its platform entirely should the media bargaining code, first proposed last year, come into force.
However Australian Prime Minister has vowed not to kowtow to the companies, telling journalists "we don't respond to threats".
The code, designed to "level the playing field" by ensuring Australia's struggling journalism industry, has not been well-received by tech companies, who have pushed back hard against it.
"If the code becomes law, Google would have no real choice but to stop providing search in Australia," Silva told an Australian Senate hearing on Friday.
"That's a worst-case scenario and the last thing we want to have happen, especially when there is a way forward to a workable code that allows us to support Australian journalism without breaking search.
"Now that would be a bad outcome for us, but also for the Australian people, media diversity, and the small businesses who use our products every day. It's not a threat. It's a reality."
Silva said paying for news content would break Google's business model, and would undermine a commitment to a free and open internet.
Meanwhile, Simon Milner, Vice President of Public Policy for Asia-Pacific at Facebook, told the Senate that having to pay for news content could see it blocked for Australian users.
He said news content, while bettering the user experience for Facebook users, has "almost no commercial value".
"Clearly there's a range of ways in which people find out about what's going on in the world and some of that is by what they consume on Facebook. Some of that will be from what we might think of as kind of mainstream news sources," Milner said.
"We've estimated that less than 5 percent of Facebook's newsfeed actually involves that kind of content."
Speaking after the hearing, Morrison said the government would not respond to Google and Facebook's warnings.
"Australia makes our rules for things you can do in Australia. That's done in our Parliament. It's done by our government, and that's how things work here in Australia," he said.
"People who want to work with that, in Australia, you're very welcome. But we don't respond to threats."