Google To Pay Mozilla £577m For Search Deal

Money financials

Google is to pay Mozilla a staggering £192m every year for the recently agreed Firefox search deal

Mozilla seems to have done a great negotiating job after it emerged that Google is paying it $300 million (£192m) a year over the next three years, to feature its search engine in its Firefox Web browser, AllThingsDigital learned 22 December.

If true, Mozilla will take in nearly three times as much in 2012 as it took in 2010, when nearly $100 million (£64m) of its $123 million (£79m) in revenues came from its previous search deal with Google.

Bidding Process

AllThingsDigital said Mozilla was able to command such a handsome sum by including Google search rivals Microsoft and Yahoo 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 20 December and confirmed was good for at least the next three years.

In the arrangement, Mozilla drives searches to 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 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.

Other Projects

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.