The Australian investigation comes as more regulators and consumers watchdogs around the world are complaining that Google doesn't take people's privacy seriously enough.
Google maintains that its users' privacy is one of the company's highest priorities.
The probe follows questions over whether Google employees taking photographs for the company's "Street View" mapping service illegally collected private information from wireless networks.
Last month, Google acknowledged it had mistakenly collected fragments of data over public Wi-Fi networks in more than 30 countries while it was taking pictures of neighborhoods for the Street View feature. Google said it discovered the problem after German regulators launched an inquiry into the matter.
Also last month, the head of the House Judiciary Committee in the US, Michigan Democrat John Conyers, sent letters to Google and Facebook urging them to cooperate with any government privacy inquiries. Conyers asked Google to retain the data until any inquiries are complete.
"In light of concerns having been raised by the public, my department thought there were issues of substance that were raised that require police investigation," Australia's Federal Attorney General Robert McClelland told journalists in Melbourne.
The case was referred to the Australian Federal Police on Friday, he said. It will focus on whether the company breached the country's telecommunications interceptions act, which prevents people accessing electronic communications other than for authorized purposes, he said.
"This was a mistake," Google said in a statement. "We are talking to the appropriate authorities to answer any questions they have." Last month, Communications Minister Stephen Conroy, addressing the Australian accusations, said Google was responsible for the "single greatest breach in the history of privacy."
