"I've unfortunately been having issues with my pec muscle and unfortunately it's been getting worse", Williams told reporters.
"Now I wish her all the best because she's a fantastic player and I don't know how much longer it will take before she gets back to her old self, but I wish her all the best".
Williams revealed she chose to play in the doubles to test her fitness but now faces a race against time to be fit for Wimbledon.
"I gave up so much from time with my daughter and time with my family all for this moment".
The match was going to be among the most anticipated in the tournament, a clash between two of the world's biggest tennis stars.
"I'm beyond disappointed", Williams added. "It's just a match I always get up for".
"It's been a while, and I think a lot has happened in our lives for the both of us in very different ways". I thought it was a ideal opportunity to see how I was going. It also was an opportunity to test things out to see if there was a way she could manage the injury, in anticipation of the singles Monday.More news: IN IMAGES: Nadal's 16-0 streak vs. old buddy Gasquet
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It is unclear at the stage how serious the injury is and whether it would rule out Williams playing in Wimbledon, but the American champion will have the grass court tournament firmly in her sights.
Q: I know that you want to get back to Olympia; work with me here, please. "Her game matches up so well against mine".
"It's hard", she said, per Reem Abulleil.
"I'm having an MRI (scan) tomorrow, I'm going to stay here to see the doctors and see as many specialists as I can", she said.
"I made a promise that if I'm not at least 60 percent or 50 percent, then I probably shouldn't play", she added.
Sharapova progresses straight through to the quarter-finals as a result of Williams' withdrawal. I love you, ' Serena wrote on her Instagram.