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Why Mozilla's Deal With Google Gets Ever Shakier

The successful rise of Mozilla’s Firefox browser is one of the most storied tales of the open source community. Despite the browser’s success, however, Mozilla remains hugely financially dependent on Google — possibly perilously so.

While some people don’t realize it, Mozilla makes the lion’s share of its revenues from Google. In fact, more than 90 percent of Mozilla’s revenue comes from search-related deals, and in Google’s case, that’s in exchange for a search box in Firefox that steers users of the browser into Google’s lucrative search-and-ad ecosystem.

Mozilla’s deal with Google is set to expire in November 2011, and there are good reasons to question whether it will be renewed. For one thing, Google has just delivered beta versions of its Mac and Linux Chrome browsers, as well as a large collection of much-awaited extensions for Chrome. It’s fleshing out an open-source, cross-platform browsing strategy that could enable it to break its financial bond with Mozilla.

If that happens, it would be an enormous financial blow to Mozilla, and one that the company tends to play down. That’s especially true because with Yahoo and Microsoft in a far-reaching search partnership — and Microsoft having absolutely no reason to buddy with the company whose browser keeps eating Internet Explorer’s lunch — Mozilla has fewer alternatives to its Google deal.

Mozilla may have a bright future focusing on some of its other projects, though. This week, the company released version 3 of its free, open source Thunderbird email client. Mozilla Chair Mitchell Baker calls the release “vastly improved,” and points to its new search capabilities and tabbed functionality as strong points. Despite the fact that Thunderbird has never been anywhere near the hit with users that Firefox is, it is showing signs of making headway.

For example, the French Army is ditching its Microsoft Outlook infrastructure in favor of Thunderbird. Matt Asay wonders if it could be as big a long-term success as Firefox. Meanwhile, we’ve already noted the promise that Mozilla’s Raindrop project has. If Mozilla can monetize some of its rapidly improving messaging projects, it could help diversify its Google/Firefox risk.

When Google’s Chrome OS arrives next year, it may introduce the Chrome browsing experience to many more users than ever before. By then, the Chrome browser will also be available — with useful extensions — on Windows, the Mac and Linux. What will Google’s own browser market share be like by then? Browser market share doesn’t change overnight, but it can move a lot in a year or two. We’ll see what happens, but in the meantime there are ever more reasons to question Mozilla’s complicated, more tense, and overwhelming financial dependence on Google.

19 Responses to “Why Mozilla's Deal With Google Gets Ever Shakier”

  1. Perhaps the author of this article should look at what engine chrome uses and who owns/develops it. If google cuts off Mozilla, they will have to create their own browser engine or Gecko will go stale and Chrome will fall to the side with Mozilla.

  2. The real reason Google will hesitate to pull the plug prior to Chrome supplanting Firefox is that Mozilla may get desperate if they lose that revenue stream. Mozilla would be forced into an M&A event with a Tier-1, which well could be a Yahoo! or a large internet independent (the newly spun out AOL?). If google loses 1/3-1/2 of that market, they are suddenly threatened. Mozilla is out to save the world and promote the internet…delivering significant share of traffic direct to google. With IE sending folks to bing, they need Firefox traffic now more than ever.

  3. larsen lewis

    google is not stupid to leaving mozilla so early.

    that would happen only once chrome has gone past the firefox market share by some margin consistently.

    google uses mozilla in two ways.

    It kills competion with microsoft in terms of search engine by having the google as the default search engine and having firefox competing with Internet explorer at he same time.

  4. The likely outcome is that chrome is going to eat in IE market share instead of Firefox. Because IE is a soft target with still a large market share up for grabs. If both Firefox and Chrome increase their market share at the expense of IE Google would be insane to not renew their deal. Because that leave the door wide open for Microsoft to cut a deal with Mozilla so they could finally kill IE and embrace Firefox! Off course since it the smart move you can be sure Microsoft would never let go of their pride and do it!

  5. Mozilla has never done anything particularly innovative. Even Google’s Chrome, which in user-interface terms is nothing special, beats them in the plumbing department. Firefox after all these years is still riddled with memory leaks. Chrome finally just punted on this problem with its multi-process scheme.

    The shame is that browsers like Opera and iRider show far more real innovation but get no attention from the press.

  6. Google doesn’t have a deal with Mozilla just for fun, it’s probably because they see it as a good way to maintain a grip on the search market – probably the same reason Google has a deal with Opera Software.

    If Google drop their deals with Mozilla and Opera, they could probably get deals with other search engines (as Opera has in eastern europe (Yandex) and China (Baidu)).

  7. If Google cuts off Mozilla’s funding, Mozilla is going to put someone else in that search box. It has to; thy can’t afford to give away their only revenue stream for free. For all the projects that Google has now, they still make all their money most of their money thru search ads. A search engine is fundamentally a way to look for something else on the Internet, making it easier for people to switch death engines than the end point they are trying to reach. If the 1 in 4 people who have Firefox suddenly start using Bing or Yahoo or whatever, that is a big chunk of Google’s bottom line. Sure, some will keep using Google by going to manually or switching search engines, but out of 350 million users a lot will use the default.
    People don’t realize that while Mozilla depends on Google totally, Google depends on Firefox some, too

  8. @cm–those are good points about Google not thinking like a software company, but I think they mainly apply to what we’ve seen from Google up until now. The company is changing how it thinks about applications and platforms–it has to.
    Eric Schmidt has said that Google’s next billion dollar opportunity is in the enterprise–such as getting organizations to replace Microsoft Office with Google Apps. How will the company achieve that without beefing up support, sending people out into the field to evangelize apps, etc.? How will it do the same for Chrome OS, where people will definitely want support if it doesn’t work with their printers. Google will become like traditional software companies in more ways, I think.


    • I agree that Google likely will become more of a traditional software company, but that doesn’t diminish the attractiveness of Firefox’s user base. I would expect Google or MS to readily pay for Firefox traffic while trying to beat them with their own browser. Especially so for MS since they don’t seem to be doing particularly well in a head-to-head browser contest.

  9. This appears to be written from the perspective that Google is a software company, interested in competing in the browser wars. I think Google has demonstrated that this is not the case. Google invests in things that will drive users to the Internet and to Google. Firefox is one very successful method for achieving those goals. Why would Google end the relationship? Why would they not support BOTH Firefox and Chrome?

    If you think like a software company, then supporting ‘the competition’ doesn’t make sense. But Google isn’t a software company, and Firefox isn’t the competition, it is a channel, and a very effective one.

    • Great point! Google will share ad revenue with ME for putting a search box on my website. So, why wouldn’t it continue paying Firefox for the traffic that comes from there?

      Note that Google is only sharing the ad revenue with Firefox. It is not simply making a some arbitrary fixed payment. So, there is no reason to stop those payments as long as it gets ad clicks from Firefox users.

    • Totally agreed. Also, there is no way Google will let go of Firefox. With the kind of market share it owns in the browser industry (it is already the leader in countries like Germany), that one tiny search bar can dictate the market shares of search engines.

      Hypothetically if Google search gives way to Bing on FF, imagine the sudden spike in the market share of Bing. No way Google would want that to happen.