Mozilla Grows with Google

First appeared in eWeek
Google will pay Mozilla $300 million a year for the next three years in a search deal it renewed earlier this week. The deal will give Mozilla much-needed cash to grow its business.

The Christmas holiday isn't the only thing Mozilla employees have to be cheerful about these days.

Google (NASDAQ:GOOG) is paying the software maker $300 million a year over the next three year to feature its search engine in its Firefox Web browser, AllThingsDigital learned Dec. 22.

If true, Mozilla will take in nearly three times as much in 2012 as it took in 2010, when nearly $100 million of its $123 million in revenues came from its previous search deal with Google.

AllThingsDigital said Mozilla was able to command such a handsome sum by including Google search rivals Microsoft (NASDAQ:MSFT) and Yahoo (NASDAQ:YHOO) in the bidding process for the coveted slot in Firefox, which has anywhere from 22 to 25 percent market share, or hundreds of millions of users worldwide.

Google and Mozilla declined to comment on the financial terms of the new agreement, which Mozilla announced Dec. 20 and confirmed was good for at least the next three years.

In the arrangement, Mozilla drives searches to Google.com from the search box in Firefox and Google pays Mozilla a portion of ad revenues generated from those searches.

The arrangement is certainly interesting because it's not without some tension. Google launched its Chrome Web browser in September 2008, when Firefox was on its way to garnering 25 percent share by nibbling away at Microsoft's (NASDAQ:MSFT) Internet Explorer share.

Chrome commands anywhere from 18 percent to 25 percent market share, depending on whether you believe the more conservative number from Net Applications, or the loftier number from StatCounter.

By tripling its revenue with Google's search deal alone, Mozilla is the big winner in this deal. The company gets the cash to fund other projects beyond Firefox, which, while popular and steadily improving, is no longer growing.

Mozilla Messaging CEO David Ascher identified some of those projects as Boot2Gecko, a Firefox OS for smartphones; the identity-based BrowserID alternative to Facebook Connect and Google Account credentials; and Apps initiative, which is intended to help developers write programs that work on all devices.

Google wins on multiple fronts. One, it benefits from millions of searches driven by millions of Firefox users. Two, it keeps those searches away from Bing , which at only 15 percent market share is more desperate to have them.

Three, Google comes off as a benevolent benefactor, providing the majority of funds for a leading, fellow open-source Web browser with which it shares a lot of common interests.

Finally, Firefox and Chrome both win because together they account for anywhere from 40 to 50 percent market share, providing a nice pair of open-source alternatives to market leader Microsoft Internet Explorer, which has dominated the market for the last 15 years since stamping out Netscape.

Are Google's Prospects Threatened by Firefox?
As Originally Posted at The Wall Street Journal

It's no secret that Mozilla's Firefox Web browser is emerging as a potent competitor to Microsoft's Internet Explorer. What may not be fully appreciated is the impact that Firefox could have on Web-browsing habits -- and the number of searches people perform.

The most recent version of Firefox, released last June, makes it much easier for Web surfers to return to a site they've previously visited. They won't need to know the site's address -- the browser's address bar offers what's essentially an automated bookmarks list. This is likely to reduce the number of searches per person over time.

The feature is likely to become standard. Microsoft is adding something similar in its upcoming version of Internet Explorer. Google isn't sitting still. Three months after the new Firefox version was released, Google came out with its Chrome browser, which also has a similar feature.

Search will remain a vibrant market. Firefox's new feature won't help someone searching for the first time. And the importance to ad revenues of people getting to sites they already know is unclear.

That said, anything that could undermine the number of searches each Web user has to perform only adds uncertainty to the category's growth prospects. For Google, the dominant player, the implications can't be good.