Is there a Google Mozilla merger in the making?

E-commerce

by Ben Sullivan| 27 November 2013

While battling it out with Chrome and Firefox, Mozilla’s financial statements actually show 90% of its income is being drawn from Google.

We're not one for sensationalist headlines here at CBR. No, we prefer to be much more subtle. But you may be thinking 'what's with this ridiculous Google/Mozilla headline?'

Well, while at first the two firms may be seen as close competitors (and yes, you're right in saying that), Mozilla's 2012 financial report shows yet another rise in the amount of revenue that lands on Mozilla's doorstep from Google.

The Firefox owner's revenue has almost doubled from $163 million in 2011 to $311 million in 2012.

That is almost all of Mozilla's income generated from Google being the default search engine in Firefox. As Google pays Mozilla a fee for referrals generated, Firefox is fetching 90% of Mozilla's income.

So where did this massive jump come from?

In Mozilla's FAQ section accompanying the financial release, the open-source knight says: "Our search partnerships are designed as multi-year contracts. Near the end of each contract, Mozilla negotiates market-value rates from multiple search providers based on the present and future value our products provide. At the end of 2011, Mozilla negotiated a new agreement with Google based on growth and impact from our Firefox desktop browser."

But things are still a little muddy. When Google and Mozilla last confirmed a partnership it was way back in 2008, where Firefox had a 22% share of the desktop browser market and Google Chrome was basically non-existent. By the close of play 2011, however, there was only a pinch separating the two browsers, with Firefox on 21% and Chrome on 19%.

So, with a 1% drop for Firefox, and a massive increase for Chrome almost urging it to overtake Firefox, why would Google continue paying to hold up a competitor?

Barry Collins from PCPro puts forward two brilliant theories. The first theory, Barry explains, is that Firefox may have massively increased the search volumes it's sending to Google.

"Firefox has over the years changed its default homepage from a splash screen showcasing Firefox features to a Google search box, which could certainly help increase search referrals."

But the other theory is the one that probably hits the nail on the head. He says: "More likely, I suspect, is that one of Google's search rivals - and let's not mince words, we're talking about Microsoft - put a much better offer on the table for Mozilla to switch its default search engine and homepage to Bing, and left the open-source browser maker in a much stronger bargaining position with Google. A browser with 20% market share would still generate enormous search volumes, and Google wasn't prepared to cede that revenue to Microsoft, so it upped its offer."

So where else does Mozilla get its money from? Bing, Yahoo, Yandex, Amazon and eBay partnerships all helped the company. Mozilla declined to disclose specific agreements with search providers, but we almost don't need the answers as Google's finger in the pie all but makes these irrelevant.

Further, Mozilla states that "a growing percentage of our revenue also comes from support from the public, including grants and individual donors like you." But, out of the $311m they earned in 2012, it turns out only $855,000 of that was from contributions.That's 0.2%!

Regardless of these figures and where it's all coming from, one thing that the financial reports do prove is that Mozilla is doing rather well for itself. In 2011 its revenue was $163 million.

But, alas, it would seem that Mozilla has pretty much every one of its eggs in Google's basket and, when the current contract ends in 2014, where will Firefox stand? Will it still independent, or leaning heavily on Google for its own survival?

Perhaps it is now an acceptable time to maybe start worrying a little about Mozilla's future - an independent future anyway.

Another factor that has to be brought into play is Mozilla's Firefox OS, which show Mozilla going head to head yet again with its biggest platform contender, Google's Android OS, which by some estimates is now running perhaps 81 to 90% of all smartphones worldwide. That's a high target for Mozilla to aim for, especially as Google will see no incentive whatsoever to encourage users to dart in the direction of the Firefox OS like it has the leeway to do with the Firefox browser.

But Mozilla says that their focus is on "delivering a superior user experience and getting developers excited and not on generating revenue from Firefox OS at this time."

Couple this with the fact that browsing habits are veering away from desktops and into the realm of mobile devices, where Google actually dominate with 30% of the mobile browsing market over Firefox's 0.1%, and it really makes you start to wonder.

There are some who may be hoping for Mozilla to find its own significant source of revenue that doesn't have to rely on Google, but how plausible that is, seeing the influence of Google rise year over year, is contestable.

We will have to wait until the contract ends in 2014, though, and keep our fingers crossed for the little guy that it just really getting thrown coppers from the rich guy.

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