5 ms·

Google Will Pay Mozilla Almost $300M Per Year in Search Deal

87 points by mbrubeck 15y ago

scarmig 15y ago
What's actually being paid for, here? It could be the case that having Google as the default in Firefox will pay for itself through advertising. Anyone have any feel for how likely that is? If it isn't, is it an attempt to buy good will? Trying to gain some leverage over Mozilla when it comes to taking sides in the standards war? Or just the idea that any time Firefox gains a user is a time that Safari or IE isn't gaining that user, and that any marginal hits to the adoption of Chrome are disproportionately compensated by hits to the adoption of competing browsers?
- azakai 15y ago
  > What's actually being paid for, here? The same as with Google's previous deals with Mozilla, Opera, etc. By being the default search engine, Google gets more prominent placement in the browser. Were Google to no longer be the default in Firefox, some users would use alternatives to Google - either because they just leave the non-Google default because it is good enough, or because they are exposed for the first time to the alternatives, and they find they like them - all of which Google wants to prevent at all costs. Another way to look at this is that there were some estimates thrown around during the Flock days of how much advertising revenue a browser generates for a search engine (this was Flock's proposed business model). I think I remember $1-2 per user per year. That should actually be higher today, assuming in the ensuing years search engines have gotten better at monetizing traffic which seems reasonable. Given that, $300M sounds about right given the amount of users Firefox has - apparently Firefox was receiving below market value before.
- deleted 15y ago
  [deleted]
- redthrowaway 15y ago
  >Anyone have any feel for how likely that is? As a rough napkin calculation, Firefox has 25% of the market share. So, roughly, 25% of Google's revenue comes from FF users. That's ~ $7.5BB annually. Now, as to how many of those users would manually choose to use Google for search, I don't think anyone can say for sure (although I'm sure Google has made a good estimate). Suffice to say, Google clearly sees it as worth their while to pony up and keep those users directed towards them by default.
  - mehwoot 15y ago
    Woah, big leaps here. First, just because firefox has 25% of the browser market share most certainly does not mean that they provide 25% of google searches! What about all the searches through google's homepage, mobile, custom site search, etc, etc. A lot of people still use the homepage (I know, not very many amongst the tech savvy). Secondly, whilst most of google's income is advertising, not all of it is income from advertising on their main search results page- doubleclick, adwords, etc, etc. Lots more stuff there. I would place it for a rough guess AT MOST 10% of google's income comes from firefox.
    - nl 15y ago
      A lot of people still use the homepage The default Firefox home page (about:home) is a branded Google search. Combine that and the Firefox search box and I would bet you cover 90% of the searches Firefox users do. Anyway, even if it is 10% it doesn't change the outcome substantially - it drops the revenue to $3-4 billion instead of over $7 billion. Either way it is worth paying $300 million for.
      - mehwoot 15y ago
        Sorry, by homepage I meant typing in "www.google.com" and searching from there. Or typing google into the search bar and then getting to google, and typing the query there. Believe it or not, a lot of people still search these ways. But yeah, def still worth it, I was just questioning the "25% of google's income" claim. Edit: In fact, I found a source for these numbers: http://news.softpedia.com/news/Firefox-Google-Search-Box-Traffic-Bigger-than-Bing-Altogether-150576.shtml http://news.softpedia.com/news/Firefox-Google-Search-Box-Tra... According to this [April 2010 - but I don't think firefox's market share has actually changed a lot since then], 82% of the search market is google, and 9.18% of the search market is searches from firefox via google. That puts firefox at 11% of google's searches. I think then about 8-9% of google income would be a good estimate- couldn't quickly find any data on what % of their income comes from search, but http://www.coastdigital.co.uk/news/google-gives-breakdown-of-revenue-for-the-first-time/ http://www.coastdigital.co.uk/news/google-gives-breakdown-of... shows that it def isn't 100%.
- huhtenberg 15y ago
  > What's actually being paid for, here? For this - http://img585.imageshack.us/img585/7109/googlevy.png http://img585.imageshack.us/img585/7109/googlevy.png
  - cpeterso 15y ago
    $300M / (16*16 pixels) = ~$1M/pixel!
- jaylevitt 15y ago
  Google's product is not Chrome. Google's product is not search. Google's product is advertising. Search is how they deliver it, and browsers are how they deliver THAT. Google doesn't care, financially speaking, if Chrome or Firefox does better in the marketplace. They care about the eyeballs that Firefox, Chrome, and any other browser can deliver to Google ads.
  - davidu 15y ago
    This is very wrong. Google cares deeply if Chrome wins. You are being way too narrow in your focus. Advertising is not their product, it's their revenue stream. Their product is _everything_ that sits between a user and monetizing an ad. Just look at what they have done from an engineering, offensive and defensive position here. It's all about that ethereal space between users and monetization. That's the battlefield, and they want all of it. They need FF because when Chrome dominates, FF needs to be a viable competitor. With Bing, it would be worse off.
    - zobzu 15y ago
      True, but also, if Chrome wins, it means they don't have to care about these deals too much anymore. Because right now is Firefox switches search engine, it's very bad for Google. Chrome will never switch. So, yeah. That and that they can use Chrome to lock people into Google services in the future.
      - shoota 15y ago
        Actually, Chrome gives the user a choice of search engine on first startup and does not have a default browser ( at least in the United States)
        davidu 15y ago
        This is true, but it's also theatre.
      - drivebyacct2 15y ago
- nl 15y ago
  It could be the case that having Google as the default in Firefox will pay for itself through advertising. Of course it will, easily (Seriously - people should understand that Google's business is search (and advertising), and they want to commoditize its complements - browsers and phones with browsers on them). Google does roughly 1 billion searches a day[1], and makes conservatively $0.08 per search[2]. Firefox has roughly 25% market share. $0.08 * 1,000,000,000 * 0.25 = $20,000,000 per day. Yearly revenue = $7,300,000,000 = $7.3 billion Reasonableness check: Google's yearly revenue = $29.3 billion. $29/4 (ie, Firefox at 25%) = $7.25 billion, which seems roughly right. [1] http://www.jeffbullas.com/2011/05/16/50-amazing-facts-and-figures-about-google/ http://www.jeffbullas.com/2011/05/16/50-amazing-facts-and-fi... [2] http://www.quora.com/How-much-revenue-does-Google-make-per-query http://www.quora.com/How-much-revenue-does-Google-make-per-q...
  - jackowayed 15y ago
    That estimate seems pretty far off. First, I think it's only fair to attribute ~1/2 of their revenue to search. You've got to give a lot to web ads, gmail ads, etc. Second, I'm not sure it's quite fair to give FF 25% of their total search. It may be 25% of their desktop search, but mobile search is getting bigger and bigger. I'd say 25% is at best an upper bound. Third, I think a large number of FF users would use Google search even if that required changing the default. I'd guess that it's on the order of 50%. The value of the deal is only the value of the searches they gain. That said, even if you divide by 10, spending $300M to making $700M and get goodwill with developers is a great deal.
    - kijin 15y ago
      > I think a large number of FF users would use Google search even if that required changing the default. I'd guess that it's on the order of 50%. I think you're overestimating the degree to which the average user is willing to make any changes to any default functionality. Remember, these are the people who google "google".
    - nl 15y ago
      That estimate seems pretty far off. Well, it may well be 50% off, or even 80% off, but it does give you an order of magnitude. 100% correct numbers aren't really material: this is a really good deal for Google. You are right that not all their revenue comes from search, and I should have thought of that. 66% of their revenue is from Google websites[1]. They don't break that down, but I'd suspect 90% is search (Youtube is probably a reasonable contributor but search ads are very expensive, and Google gets pretty good fill rates on them). Mobile search is growing quickly, but they still "only" made $2.5 billion over the last 12 months from it (and also I presume this deal covers the Firefox mobile browser, which might not be popular now but Mozilla has been working hard on). But yes, 25% market share is probably an upper bound. I think a large number of FF users would use Google search even if that required changing the default. It is possible that Mozilla could do a deal to change the search engine used on existing installs. I would hope they wouldn't do that, but it is something another search engine would probably have wanted to explore. Also, about:home is the default home page on Firefox, and currently defaults to a Mozilla branded Google search page. That could be changed on existing browsers for sure. All up, I agree that the $7.2 billion number is probably high, but it seems likely it would be more than $1-2 billion. [1] http://investor.google.com/documents/20100331_google_10Q.html http://investor.google.com/documents/20100331_google_10Q.htm... [2] http://searchengineland.com/will-google-see-6-25-billion-in-mobile-ad-revenue-next-year-97280 http://searchengineland.com/will-google-see-6-25-billion-in-...
bobthebee 15y ago
The dynamics behind the deal are interesting. Google probably paid just enough to outbid Bing, the second highest bidder. Or Firefox played a great hand of poker with Google. In either case it should trouble Mozilla that they are dependent on not only Google, but Bing (by extension) for the majority of their revenue. Finding a sustainable way to reduce reliance on these companies should be the #1 job of the Mozilla business team in the next 3 years, before the deal comes up for renewal.
- v21 15y ago
  I'm sure Mozilla feels very precarious getting such a huge chunk of money from a single source. But: - Mozilla isn't a company, it's a non-profit (this deal was done by Mozilla Corp, yes, but that's a wholly owned branch of the foundation). Reducing their reliance on Google for cash is never going to be Mozilla's aim as a whole. - Three years is a hell of a long time. When the last deal was negotiated, there was no Bing, and no Chrome. The world was a very different place. No matter how good their strategy is, it's going to be a terrible one for the world in 3 years time. - The interests of the Mozilla foundation and Google are broadly aligned - they both care about an open, free web. That's a rare thing to find in large industry players these days.
  - robryan 15y ago
    Your right that for Google whether a user is using Chrome or using Firefox with Google Search it shouldn't matter much on the bottom line and they don't have to worry too much about feature support from Firefox as they are quick to propose/ adopt standards.
- robryan 15y ago
  Actually I think it is looking more sustainable now that bing has high interest in the position as well. As long as Firefox holds a market share similar to its current one and bing holds its market share to keep ms interested in pushing it the decent sized deals should continue and probably grow. What would to suggest as an alternate revenue source?
- nl 15y ago
jcampbell1 15y ago
I hope mozilla can now afford H.264 licenses. They are the last holdout to make web video easy.
- Zirro 15y ago
  Isn't this an issue of keeping the web open, rather than the cost of licenses?
- azakai 15y ago
  Not true. Chrome: http://blog.chromium.org/2011/01/html-video-codec-support-in-chrome.html http://blog.chromium.org/2011/01/html-video-codec-support-in... Opera: See an opinion piece at http://my.opera.com/haavard/blog/2011/01/13/openness http://my.opera.com/haavard/blog/2011/01/13/openness
  - Erunno 15y ago
    Chrome still supports H.264 and and there are no indications that Google is planning to change that in the near future.
    - azakai 15y ago
      Isn't the indication that Google said it will remove H.264? Have you seen Google go back on that statement?
- deleted 15y ago
  [deleted]
- fpgeek 15y ago
  Mozilla would need to be able to convey their H.264 licenses under open-source terms. That would effectively destroy most existing and future revenue streams associated with H.264 (as licensees could elect to use Mozilla's open-source license for free instead). In other words, Mozilla would need to be able to buy the entire H.264 patent pool. Even at $300M/year, they're nowhere near that.
bugsbunnyak 15y ago
Kind of curious: what is mozilla spending (or plan to) all of this cash on? Wikipedia says the MozCo has ~600 employees. Even if they are paying average $200k per person and spending another 80 million on rent, hosting, equipment, etc. that still leaves ~$100mil. Executive compensation? Rainy day fund?
- zobzu 15y ago
  Bank.
- mehwoot 15y ago
  Cocaine.
- ianb 15y ago
  Mozilla has been hiring quickly, and still puts some money in the bank. Most money is spent on employees.
fpgeek 15y ago
So the "OMG! Mozilla is dead without the Google deal" stories weren't just wrong they were backwards. The real story was "OMG! There's a bidding war over Mozilla's new search deal that will get them a lot more money." It is enough to make you wonder whether a player in those negotiations started the previous rumor in the first place (presumably as leverage). The timing certainly fits.
- maxerickson 15y ago
  There are still people convinced that the glass has a hole in it.

87 points by mbrubeck 15y ago

What's actually being paid for, here? It could be the case that having Google as the default in Firefox will pay for itself through advertising. Anyone have any feel for how likely that is? If it isn't, is it an attempt to buy good will? Trying to gain some leverage over Mozilla when it comes to taking sides in the standards war? Or just the idea that any time Firefox gains a user is a time that Safari or IE isn't gaining that user, and that any marginal hits to the adoption of Chrome are disproportionately compensated by hits to the adoption of competing browsers?

azakai 15y ago
> What's actually being paid for, here? The same as with Google's previous deals with Mozilla, Opera, etc. By being the default search engine, Google gets more prominent placement in the browser. Were Google to no longer be the default in Firefox, some users would use alternatives to Google - either because they just leave the non-Google default because it is good enough, or because they are exposed for the first time to the alternatives, and they find they like them - all of which Google wants to prevent at all costs. Another way to look at this is that there were some estimates thrown around during the Flock days of how much advertising revenue a browser generates for a search engine (this was Flock's proposed business model). I think I remember $1-2 per user per year. That should actually be higher today, assuming in the ensuing years search engines have gotten better at monetizing traffic which seems reasonable. Given that, $300M sounds about right given the amount of users Firefox has - apparently Firefox was receiving below market value before.
deleted 15y ago
[deleted]
redthrowaway 15y ago
>Anyone have any feel for how likely that is? As a rough napkin calculation, Firefox has 25% of the market share. So, roughly, 25% of Google's revenue comes from FF users. That's ~ $7.5BB annually. Now, as to how many of those users would manually choose to use Google for search, I don't think anyone can say for sure (although I'm sure Google has made a good estimate). Suffice to say, Google clearly sees it as worth their while to pony up and keep those users directed towards them by default.
- mehwoot 15y ago
  Woah, big leaps here. First, just because firefox has 25% of the browser market share most certainly does not mean that they provide 25% of google searches! What about all the searches through google's homepage, mobile, custom site search, etc, etc. A lot of people still use the homepage (I know, not very many amongst the tech savvy). Secondly, whilst most of google's income is advertising, not all of it is income from advertising on their main search results page- doubleclick, adwords, etc, etc. Lots more stuff there. I would place it for a rough guess AT MOST 10% of google's income comes from firefox.
  - nl 15y ago
    A lot of people still use the homepage The default Firefox home page (about:home) is a branded Google search. Combine that and the Firefox search box and I would bet you cover 90% of the searches Firefox users do. Anyway, even if it is 10% it doesn't change the outcome substantially - it drops the revenue to $3-4 billion instead of over $7 billion. Either way it is worth paying $300 million for.
    - mehwoot 15y ago
      Sorry, by homepage I meant typing in "www.google.com" and searching from there. Or typing google into the search bar and then getting to google, and typing the query there. Believe it or not, a lot of people still search these ways. But yeah, def still worth it, I was just questioning the "25% of google's income" claim. Edit: In fact, I found a source for these numbers: http://news.softpedia.com/news/Firefox-Google-Search-Box-Traffic-Bigger-than-Bing-Altogether-150576.shtml http://news.softpedia.com/news/Firefox-Google-Search-Box-Tra... According to this [April 2010 - but I don't think firefox's market share has actually changed a lot since then], 82% of the search market is google, and 9.18% of the search market is searches from firefox via google. That puts firefox at 11% of google's searches. I think then about 8-9% of google income would be a good estimate- couldn't quickly find any data on what % of their income comes from search, but http://www.coastdigital.co.uk/news/google-gives-breakdown-of-revenue-for-the-first-time/ http://www.coastdigital.co.uk/news/google-gives-breakdown-of... shows that it def isn't 100%.
huhtenberg 15y ago
> What's actually being paid for, here? For this - http://img585.imageshack.us/img585/7109/googlevy.png http://img585.imageshack.us/img585/7109/googlevy.png
- cpeterso 15y ago
  $300M / (16*16 pixels) = ~$1M/pixel!
jaylevitt 15y ago
Google's product is not Chrome. Google's product is not search. Google's product is advertising. Search is how they deliver it, and browsers are how they deliver THAT. Google doesn't care, financially speaking, if Chrome or Firefox does better in the marketplace. They care about the eyeballs that Firefox, Chrome, and any other browser can deliver to Google ads.
- davidu 15y ago
  This is very wrong. Google cares deeply if Chrome wins. You are being way too narrow in your focus. Advertising is not their product, it's their revenue stream. Their product is _everything_ that sits between a user and monetizing an ad. Just look at what they have done from an engineering, offensive and defensive position here. It's all about that ethereal space between users and monetization. That's the battlefield, and they want all of it. They need FF because when Chrome dominates, FF needs to be a viable competitor. With Bing, it would be worse off.
  - zobzu 15y ago
    True, but also, if Chrome wins, it means they don't have to care about these deals too much anymore. Because right now is Firefox switches search engine, it's very bad for Google. Chrome will never switch. So, yeah. That and that they can use Chrome to lock people into Google services in the future.
    - shoota 15y ago
      Actually, Chrome gives the user a choice of search engine on first startup and does not have a default browser ( at least in the United States)
      - davidu 15y ago
        This is true, but it's also theatre.
    - drivebyacct2 15y ago
nl 15y ago
It could be the case that having Google as the default in Firefox will pay for itself through advertising. Of course it will, easily (Seriously - people should understand that Google's business is search (and advertising), and they want to commoditize its complements - browsers and phones with browsers on them). Google does roughly 1 billion searches a day[1], and makes conservatively $0.08 per search[2]. Firefox has roughly 25% market share. $0.08 * 1,000,000,000 * 0.25 = $20,000,000 per day. Yearly revenue = $7,300,000,000 = $7.3 billion Reasonableness check: Google's yearly revenue = $29.3 billion. $29/4 (ie, Firefox at 25%) = $7.25 billion, which seems roughly right. [1] http://www.jeffbullas.com/2011/05/16/50-amazing-facts-and-figures-about-google/ http://www.jeffbullas.com/2011/05/16/50-amazing-facts-and-fi... [2] http://www.quora.com/How-much-revenue-does-Google-make-per-query http://www.quora.com/How-much-revenue-does-Google-make-per-q...
- jackowayed 15y ago
  That estimate seems pretty far off. First, I think it's only fair to attribute ~1/2 of their revenue to search. You've got to give a lot to web ads, gmail ads, etc. Second, I'm not sure it's quite fair to give FF 25% of their total search. It may be 25% of their desktop search, but mobile search is getting bigger and bigger. I'd say 25% is at best an upper bound. Third, I think a large number of FF users would use Google search even if that required changing the default. I'd guess that it's on the order of 50%. The value of the deal is only the value of the searches they gain. That said, even if you divide by 10, spending $300M to making $700M and get goodwill with developers is a great deal.
  - kijin 15y ago
    > I think a large number of FF users would use Google search even if that required changing the default. I'd guess that it's on the order of 50%. I think you're overestimating the degree to which the average user is willing to make any changes to any default functionality. Remember, these are the people who google "google".
  - nl 15y ago
    That estimate seems pretty far off. Well, it may well be 50% off, or even 80% off, but it does give you an order of magnitude. 100% correct numbers aren't really material: this is a really good deal for Google. You are right that not all their revenue comes from search, and I should have thought of that. 66% of their revenue is from Google websites[1]. They don't break that down, but I'd suspect 90% is search (Youtube is probably a reasonable contributor but search ads are very expensive, and Google gets pretty good fill rates on them). Mobile search is growing quickly, but they still "only" made $2.5 billion over the last 12 months from it (and also I presume this deal covers the Firefox mobile browser, which might not be popular now but Mozilla has been working hard on). But yes, 25% market share is probably an upper bound. I think a large number of FF users would use Google search even if that required changing the default. It is possible that Mozilla could do a deal to change the search engine used on existing installs. I would hope they wouldn't do that, but it is something another search engine would probably have wanted to explore. Also, about:home is the default home page on Firefox, and currently defaults to a Mozilla branded Google search page. That could be changed on existing browsers for sure. All up, I agree that the $7.2 billion number is probably high, but it seems likely it would be more than $1-2 billion. [1] http://investor.google.com/documents/20100331_google_10Q.html http://investor.google.com/documents/20100331_google_10Q.htm... [2] http://searchengineland.com/will-google-see-6-25-billion-in-mobile-ad-revenue-next-year-97280 http://searchengineland.com/will-google-see-6-25-billion-in-...

bobthebee 15y ago

The dynamics behind the deal are interesting. Google probably paid just enough to outbid Bing, the second highest bidder. Or Firefox played a great hand of poker with Google. In either case it should trouble Mozilla that they are dependent on not only Google, but Bing (by extension) for the majority of their revenue. Finding a sustainable way to reduce reliance on these companies should be the #1 job of the Mozilla business team in the next 3 years, before the deal comes up for renewal.

v21 15y ago
I'm sure Mozilla feels very precarious getting such a huge chunk of money from a single source. But: - Mozilla isn't a company, it's a non-profit (this deal was done by Mozilla Corp, yes, but that's a wholly owned branch of the foundation). Reducing their reliance on Google for cash is never going to be Mozilla's aim as a whole. - Three years is a hell of a long time. When the last deal was negotiated, there was no Bing, and no Chrome. The world was a very different place. No matter how good their strategy is, it's going to be a terrible one for the world in 3 years time. - The interests of the Mozilla foundation and Google are broadly aligned - they both care about an open, free web. That's a rare thing to find in large industry players these days.
- robryan 15y ago
  Your right that for Google whether a user is using Chrome or using Firefox with Google Search it shouldn't matter much on the bottom line and they don't have to worry too much about feature support from Firefox as they are quick to propose/ adopt standards.
robryan 15y ago
Actually I think it is looking more sustainable now that bing has high interest in the position as well. As long as Firefox holds a market share similar to its current one and bing holds its market share to keep ms interested in pushing it the decent sized deals should continue and probably grow. What would to suggest as an alternate revenue source?
nl 15y ago

jcampbell1 15y ago

I hope mozilla can now afford H.264 licenses. They are the last holdout to make web video easy.

Zirro 15y ago
Isn't this an issue of keeping the web open, rather than the cost of licenses?
azakai 15y ago
Not true. Chrome: http://blog.chromium.org/2011/01/html-video-codec-support-in-chrome.html http://blog.chromium.org/2011/01/html-video-codec-support-in... Opera: See an opinion piece at http://my.opera.com/haavard/blog/2011/01/13/openness http://my.opera.com/haavard/blog/2011/01/13/openness
- Erunno 15y ago
  Chrome still supports H.264 and and there are no indications that Google is planning to change that in the near future.
  - azakai 15y ago
    Isn't the indication that Google said it will remove H.264? Have you seen Google go back on that statement?
deleted 15y ago
[deleted]
fpgeek 15y ago
Mozilla would need to be able to convey their H.264 licenses under open-source terms. That would effectively destroy most existing and future revenue streams associated with H.264 (as licensees could elect to use Mozilla's open-source license for free instead). In other words, Mozilla would need to be able to buy the entire H.264 patent pool. Even at $300M/year, they're nowhere near that.

bugsbunnyak 15y ago

Kind of curious: what is mozilla spending (or plan to) all of this cash on? Wikipedia says the MozCo has ~600 employees. Even if they are paying average $200k per person and spending another 80 million on rent, hosting, equipment, etc. that still leaves ~$100mil. Executive compensation? Rainy day fund?

zobzu 15y ago
Bank.
mehwoot 15y ago
Cocaine.
ianb 15y ago
Mozilla has been hiring quickly, and still puts some money in the bank. Most money is spent on employees.

fpgeek 15y ago

So the "OMG! Mozilla is dead without the Google deal" stories weren't just wrong they were backwards. The real story was "OMG! There's a bidding war over Mozilla's new search deal that will get them a lot more money." It is enough to make you wonder whether a player in those negotiations started the previous rumor in the first place (presumably as leverage). The timing certainly fits.

maxerickson 15y ago
There are still people convinced that the glass has a hole in it.