Dec 212011
 

Firefox and Thunderbird users can breathe a sigh of relief! Both products are developed by the non-profit Mozilla foundation which has just announced that they have: “negotiated a significant and mutually beneficial revenue agreement with Google. This new agreement extends our long term search relationship with Google for at least three additional years”.

Fears had been raised over the future of Mozilla (and, by extension, Firefox & Thunderbird) because their existing revenue deal with Google expired last month. For the last 3 years this deal has been Mozilla’s major source of income – accounting for more than 80% (around $100 million) of their total revenue last year.

On first appearances, it’s a strange situation for both companies to be in. On the one hand, Chrome is a major competitor to Firefox (and recently overtook it as the world’s second most popular browser) – but Google basically fund Mozilla to keep Firefox going. And on the other hand, Mozilla happily accepted a deal with Google 3 years ago even though they must have known Chrome’s release would severely impact their own market share.

In a Christmas analogy, it’s like a turkey fetching the farmer his gun… But first appearances deceive. Google obviously sees Microsoft (especially its IE and Bing combo) as its biggest competitor and Chrome’s rapid success has come at the expense of IE’s market share – not that of Firefox, which has remained stable.

It therefore wouldn’t make any sense for Google to kill off Mozilla’s funding, leaving it wide open to a revenue deal with Microsoft which would result in Bing becoming Firefox’s default search engine – a huge boost for MS and Bing, considering that Firefox still enjoys about 25% share of the global browser market.

By locking in Mozilla with funding for another three years, Google continues to profit from being the default search provider in Firefox but, far more importantly, prevents Microsoft gaining a quick win in the search engine stakes with Bing – which is really struggling to make any ground at all on runaway leader Google.

Details of the new deal are confidential but, unusually, I suspect that ‘junior partner’ Mozilla may have been firmly in the driving seat during negotiations – this deal was vital to Google to fend off Microsoft whereas Mozilla always had the MS Richmond boys to fall back on.

It can be no coincidence that Mozilla recently strengthened their negotiating position even further by toying with Microsoft in producing the ‘Firefox with Bing’ partnership – the FirefoxwithBing.com website was only registered on 18th October 2011 – perfect timing to really put the wind up Google!

An amusing aside is that this new domain was only registered for 12 months which is almost unheard of in the big boys world – when a company like Microsoft registers a domain they do it for 10 years at a time, unless they think it won’t last… Which begs the question as to whether Microsoft was ever a genuine suitor or an unwitting pawn, used only as a bargaining chip by Mozilla whilst forced to sit on the sidelines watching them sweat blood out of Google…

One final point to note – I read yesterday that Microsoft’s Online division made a $500 million loss in the last quarter – that’s $2billion a year and yet it only managed to increase Bing’s market share by a paltry 3%.

I don’t know how/where they spent so much for so little reward but if only they had wooed Mozilla more successfully and promised up to, perhaps, $200million to seal the deal – they could have got Bing as the default search engine on Firefox for an instant massive hit – and it would have been an absolute bargain.

Either Microsoft were caught with their proverbial trousers down or Mozilla squeezed Google until the pips squeaked, and then squeezed a whole lot more…

  One Response to “Mozilla Seal New Three Year Revenue Deal With Google”

  1. Way to go Mozilla :-) hope they spend the money wisely though, more testing would be a good move as they keep releasing new fixes immeditately after a new version. get it right first time please !!!