The 'Chandelier' hitmaker admitted she ''didn't realise'' just how much her friend relied on the ''validation'' that came from her career success until she had a ''real breakdown'' following the flop of her 2017 album 'Witness'.
Sia recalled: ''She had a real breakdown. She's on stage with 10 candied lollipops and clowns and dancers, selling the dream, the joy, the happiness -- and that's really hard sometimes when you're not feeling it yourself.
''I knew she was driven and ambitious, that was clear from the beginning. But I didn't realise that she was so reliant on that validation for her psychological well-being.
''She did say 'I feel lost.' ''
But Sia thinks the period was the ''best thing'' to happen to Katy because it took the pressure of her friend's career.
She explained to the Los Angeles Times newspaper: ''I think it was a big kick to her ego, but it was the best thing that could have ever happened to her, really, because now she can make music for the fun of it.
''Getting number ones does nothing for your inside.''
Around the same time, Katy and her now-fiance Orlando Bloom - who are expecting a baby girl together - had broken up, and unbeknownst to either of them, Sia was speaking to them both about their love woes.
She said: ''I'd be on the phone with Orlando and have call waiting with Katy trying to call me.''
The 'Chained to the Rhythm' singer thinks her breakdown was a slice of ''humble pie'' from the universe.
She said: ''I think the universe was like, 'OK, all right, let's have some humble pie here.'
''My negative thoughts were not great. They didn't want to plan for a future. I also felt like I could control it by saying, 'I'll have the last word if I hurt myself or do something stupid and I'll show you' -- but really, who was I showing?''
Former Bengal Lancer Harry Sullivan, aka From The Tiger's Mouth, has just released his first solo single - 'Morning News' under his new moniker.