Google Paying Mozilla $900M in Search Deal: ATD

The Christmas holiday isn’t the only thing Mozilla
employees have to be cheerful about these days.

Google (NASDAQ:GOOG) is paying the software maker $300
million a year over the next three year to feature its search engine in its
Firefox Web browser, AllThingsDigital learned Dec. 22.

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

AllThingsDigital said Mozilla was able to command such a
handsome sum by including Google search rivals Microsoft (NASDAQ:MSFT) and
Yahoo (NASDAQ:YHOO) 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 Dec. 20 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 (NASDAQ:MSFT) 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.

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 or so since stamping out


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