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Update: Mozilla making tens of millions from Firefox

March 11, 2006

Mozilla gets paid a publicly undisclosed amount for each Google search query made from Firefox by a user.

In March 2006, Weblogs, Inc. founder Jason Calacanis reported a rumor on his blog that Mozilla Corporation gained $72M during the previous year, mainly thanks to the Google search box in the Firefox browser.

The rumor was later addressed by Red Hat employee Christopher Blizzard, a member of the Mozilla Corporation board, who wrote on his blog that "it's not correct, though not off by an order of magnitude."

"I see people talking a lot about the huge profits, but we don't think about the excess as profits. Some of that money does roll up to the Foundation proper, but we work with them to determine when and where that happens. There's no chance of an IPO and it's not being put into anyone's bank account. Simply put: no one here is getting rich, " Blizzard added.

That Google pays content and search partners, as well as AdSense participants, is not new. What is interesting, however, is the amount that Mozilla earns from its users' Google queries.

"We are very fortunate in that the search feature in Firefox is both appreciated by our users and generates revenue in the tens of millions of dollars," Mozilla head Mitchell Baker wrote in a recent blog post.

The default start page for Firefox includes a Google search dialogue box. It also defaults to Google search in its engine option on the Search Bar within the browser navigational toolbar. Mozilla gets paid for each search, regardless of whether or not you click on ads.

The main disadvantage of the deal with Google is that native language versions of Firefox are not permitted to change the default search engine to one that is more useful for searching Web pages in a particular language, reported ZDNet UK.

"That [the Google deal] is why official localized builds are not allowed to change the search engine," said Gervase Markham, a Mozilla staff member. "In one way this is a restriction, but the deal has allowed things to happen."

It's such a good business that the folks at Flock and Maxthon are trying to do a similar thing by building a wrapper with value-added services (like bookmarking tools) on top of Firefox. Its all about repackaging free code.

This idea of paid carriage for the browser makers is nothing new. Back in 1996, when Netscape was dominant, they charged Yahoo, Infoseek, Excite, Lycos, and Magellan $5M each for a rotation of the traffic off of their Search button. That was when these 5 search engines were doing 20M queries/day collectively, not the billions of page views Google does now.

"Netscape ran into trouble with its browser as it sold every bookmark and link, and couldn't change the browser in a way that was better for users without breaking its deals," said Markham.

Although Netscape's decision in 1998 to launch the Mozilla project -- and therefore give away its browser code for free -- was widely considered to be a reluctant admission that Microsoft had won the battle for the prized browser market, Mozilla has since surpassed IE in terms of features and standards compliance.

However, the project never has been able to regain the ground it lost to Microsoft during its initial four years of development.

The default start page for Firefox includes a Google search dialogue box. In addition, Google is hosting the Firefox start page because, according to Baker, the company's technical infrastructure is more capable of supporting high volumes of traffic..

Opera has a similar arrangement with Google

Opera's decision to give away the browser came after the company struck "compensation deals" with some of the search engines. Apparently, the premier tenant for browser's built-in search window is Google. "The current most important deal now is with Google," company spokesperson Eskil Siversten wrote in an email. The company indicated that it has similar referral-for-dollars agreements with the likes of eBay, Dealtime and Amazon. Oslo based Opera Software before this move charged $39 for their browser. With 100,000 buyers per year the $3.9m was a big part of their $28m annual sales. However, given that Opera is about 1% of the total browser market, it cannot be making as much money as Mozilla folks.
Google, which makes its share of philanthropic and open source donations, also directly employs a few Firefox developers, including lead developer Ben Goodger.

UPDATE April 30, 2006

More evil than Satan

Google, which began beefing up its lobbying efforts in Washington, says it expressed concerns about competition in the Web search business in recent talks with the Justice Department and the European Commission, both of which have brought previous antitrust actions against Microsoft, reports The New York Times.

Internet Explorer 7 will include a search box in the upper-right corner that defaults to Microsoft's MSN search service. Google contends that this puts Microsoft in a position to unfairly grab Web traffic and advertising dollars from its competitors.

"The market favors open choice for search, and companies should compete for users based on the quality of their search services," said Marissa Mayer, the vice president for search products at Google. "We don't think it's right for Microsoft to just set the default to MSN. We believe users should choose."

Microsoft replies that Google is misreading its intentions and actions. It says the default settings in the browser, Internet Explorer 7, are easy to change (two clicks).

In fact, even a fresh install of IE7 doesn't "default" to MSN search. It uses the previous versions settings.

Meanwhile, Firefox defaults to Google. Microsofts search isn't even in the default choices. Netscape defaults to Netscape, has Google as an option and has no option to ad Microsoft's search engine (or any other engine for that matter). Camino and Safari are set on Google and can't be changed.

Anyway, IE 7 will remain just as brandable as it was in the past, so nothing is stopping Google from making deals with Dell or HP to make its search engine the default and its site the default home page on every computer they sell.

It seems Google is pursuing every option in its escalating rivalry with Microsoft, which has already led to some public battles.

Last December, Google outbid Microsoft to remain the primary search service on America Online, paying $1 billion and taking a 5% stake in AOL. Last year, Microsoft sued Google to stop a star computer scientist at Microsoft, Kai-Fu Lee, from working on search technology at Google. The suit was settled, and Lee runs Google's operations in China.

Tristan Nitot, the president of Mozilla Europe, said that although his group is struggling to survive on its current budget, it will be careful about making any deals. He said that Mozilla Europe has carried out the majority of its marketing activity on "zero budget", having spent the majority of its $20,000 allowance from the Mozilla Foundation on a large booth at the NetWorld/Interop conference in Paris last year.

"We are considering making custom versions [of Firefox] for portals and ISPs in Europe," said Nitot. "A balance has to be found between dealing with the brand and keeping the user experience. We've had offers from large portals which would solve every money issue that we have, but we would have to do stuff that we don't want to do. Mozilla Europe could be very rich now, but we said no."

It's unclear whether Mozilla has another revenue-generating option from within the browser itself.

The for-profit Mozilla Corporation uses the fund to pay its employees which currently number 40 full-time equivalents (FTE) according to Baker. Most of those FTE's reside in either Mountain View, Calif., or in and around Toronto, Canada.

Upon its creation, the Mozilla Corporation took over several areas from the Mozilla Foundation, including the development of Firefox and Thunderbird and the management of relationships with businesses.

The Mozilla Corporation was established on August 3, 2005 to handle the revenue-related operations of the Mozilla Foundation. As a non-profit, the Mozilla Foundation is limited in terms of the types and amounts of revenue. The Mozilla Corporation, as a taxable organization (essentially, a commercial operation), does not have to comply with such strict rules.

"Bill Gates teaches us that a foundation can be very large. The Mozilla Foundation is in no danger of reaching the Gates Foundation's $28.8 billion endowment. The real reason for the change isn't the amount of revenue but its source. There are some revenue streams, such as selling commercial products, which nonprofits often must avoid. There are also some activities, especially political ones, which cannot be funded with tax-deductible donations," wrote ZDNet Executive Editor David Coursey in August last year.

"The foundation is crossing a line from which it can never retreat, taking with it a bit of the romance of software by the people, for the people," Coursey wrote.

The best reason for adding a for-profit to the Mozilla mix is that it would be pretty hard, over time, to do big business without one. Needing so much organization means Mozilla is straying from its mission of developing free software and giving it away, using donations and volunteer time as its chief resources.

"I don't believe there won't be serious conflicts in the future between the foundation and the corporation if the for-profit group starts generating lots of cash. Money brings power, and people who make that happen will want a bigger slice of both. It's human nature," wrote InternetWeek Editor Antone Gonsalves in August last year.

"If the Mozilla Corporation is successful, I would also expect to see resentment build among the many developers contributing code for free," added Gonsalves.





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