Williams apparently suffered a groin injury in Wednesday's second-round match and tried to play Friday but after one game -- a service break by Petkovic -- said she was unable to continue. It was her first retirement in a Grand Slam event.
The injury leaves the Australian Open without either Williams sister. Serena Williams, ranked No. 4 in the world and the event's defending champion, hasn't played a tournament since injuring her foot shortly after winning at Wimbledon last year. Venus Williams, seeded fourth in Melbourne, had missed much of last year with a knee injury.
Top-seeded Caroline Wozniacki had just 11 unforced errors -- but also only 11 winners -- in a workmanlike 6-4, 6-3 victory over No. 29 Dominika Cibulkova and sixth-seeded Francesca Schiavone overcame 23 second-set unforced errors in a 6-0, 7-6 (7-2) victory over Monica Niculescu.
Eighth-seeded Victoria Azarenka and No. 9 Li Na each won in straight sets and earned fourth-round slots against each other. Azarenka topped Chanelle Scheepers 6-3, 6-3 and Li defeated Barbora Zahlavova Strycova 6-2, 6-1.
No. 23-seeded Svetlana Kuznetsova eliminated 11th-seeded Justine Henin, whose comeback last year basically started with a trip to the Australian Open finals. Kuznetsova was a 6-4, 7-6 (10-8) winner.
Also, 14th-seeded Maria Sharapova rallied for a 4-6 6-4, 6-4 victory over Julia Goerges and unseeded Anastasija Sevastova ousted qualifier Vesna Manasieva 6-1, 6-3.
In addition to the Azarenka-Li pairing in the fourth round, Wozniacki will go against Sevastova, Schiavone meets Kuznetsova and Sharapova will face the 30th-seeded Petkovic.