IRS Looking at Google/Mozilla Relationship 261
ric482 writes "With the release of the Mozilla Foundation's 2007 financial report, questions have been raised by the IRS, who are due to perform an audit on the non-profit organization behind the massively popular Firefox browser.
Last year, the Foundation received $66 million of its total $75 million revenue (88 percent) from search engine maestros Google, so the IRS are looking for blood over the organization's tax exempt status. Back in 2006, Mozilla got $59.5 million from Google — around 85 percent of the organization's revenue.
Google and Mozilla are part of a 'you scratch my back, I'll pay your bills' sort of agreement, with the Google search bar firmly placed in the toolbar, and on the default homepage. Things were a bit rocky a couple of months back when Google unveiled the Beta-run of its Chrome browser, but Mozilla and Google hugged it out and sealed a deal that will last for another three years. That deal will expire in November 2011."
Link? (Score:5, Insightful)
http://www.mozilla.org/foundation/documents/mf-2007-audited-financial-statement.pdf [mozilla.org]
nothing wrong with corp. support for OpenSource (Score:4, Insightful)
Soooo (Score:5, Insightful)
Why go after Mozilla? (Score:5, Insightful)
Re:Soooo (Score:4, Insightful)
Yea, microsoft is guiltless on this one too (Score:1, Insightful)
now, suddenly, IRS gets in the picture, and on the target there a major competitor and a major headache for microsoft. despite there are numerous open source software using same kind of deal with various corporations for funds, somehow, for some reason, its google+mozilla that irs feels the need to investigate.
of course, that again has no relation to microsoft, which is best pals with the neocon administration still in power. the thing is just a coincidence.
Re:Soooo (Score:2, Insightful)
Wow (Score:4, Insightful)
Re:nothing wrong with corp. support for OpenSource (Score:4, Insightful)
Using the money (Score:3, Insightful)
Shouldn't the IRS be more concerned about how is mozilla spending that money than where it comes from?
If a "save the children" non-profit organization changed their name to "Google saves the children" and Google donated $100 million, they should lose the tax exemption?
"Non-profit" isn't about how much money enters the organization but how much of it is used in pushing the agenda forward. If they're spending the millions of dollars to make a better free browser, they should still be tax exempt.
If they suddenly started using that money to buy sport cars for every programmer, they should pay taxes even if Google gave them just two dollars.
Re:Soooo (Score:5, Insightful)
I've never really wondered that. The OEMs are buying Windows licenses in batches of several thousand, on a regular basis.
It's standard business practice to give discounts to customers who provide you with a large, regular, income.
Re:Wow (Score:2, Insightful)
85% of Mozilla's funding comes directly from Google?!? For all practical purposes, Google basically owns them. No wonder Mozilla was so forgiving of Chrome.
Or it might be that Mozilla likes the idea of friendly, standards-compliant competition which steals away large chunks of the Internet Explorer market share based on the Google name. But I'm just an AC, what do I know...
Re:Wow (Score:2, Insightful)
That is why Mozilla was so forgiving of Chrome. Anybody with half a brain could have seen that.
Re:Blame Microsoft (Score:5, Insightful)
but that's OK because it's the same company?
Exactly. The issue here is that Mozilla Foundation is a non-profit organization, but Google clearly is not. Presumably IRS could be interested in exactly how close ties they have.
Re:What makes Mozilla different? (Score:2, Insightful)
If that were the case, the amount of money they are earning should fund a hell of a lot more development than is actually going on.
$50m+ per year should fund enough developers to work on a fully integrated suite of internet tools, but they seem to be barely coping with maintaining Firefox and Thunderbird.
Their primary interest seems to be ensuring that their Intellectual Property does not get included in distros like Debian. Open source non-profit my ass.
Re:nothing wrong with corp. support for OpenSource (Score:4, Insightful)
So, 72% invested, 6.7% in marketing, and 21% on development? Or, to put it another way, a third as much spent on marketing as on development? I can't think of many companies (big pharmaceuticals excepted) that have this high a ratio of marketing to product development spending.
It's probably not a bad idea that they're spending less than a third of their income, since it means that they can keep up this rate of expenditure during several years of economic down-turn irrespective of what their income does, but it does mean that, at the moment, only 21Â of every dollar that Google is paying to the foundation actually goes to improving the browser. With this in mind, developing their own browser probably made a lot of commercial sense.
Re:Yea, microsoft is guiltless on this one too (Score:4, Insightful)
How on earth did you get modded insightful for that piece of fear mongering?
Mozilla knew this might be coming - they put money aside for this eventuality already in 2003. But nice try.
Where's the smoke? (Score:5, Insightful)
Since Google is a profitable entity isn't this tax neutral to google? IE if Google and mozilla merged, and Google spent the same amount on development, and giving as mozilla does, google would have the same profit, and thus pay the same taxes. The only difference would be some of the last 15% (non google contributions.) Since individuals can write off gifts to Mozilla foundation, but not to google then that's the money the IRS is chasing, not googles portion of the pie.
Stop the Debian Bullshit (Score:5, Insightful)
Honestly, stop with the Debian bullshit already. Mozilla doesn't want others altering their software and still keeping their trademarks intact (which is what Debian wants to do). Debian places the *EXACT* same restrictions on their own trademarks.
Re:Blame Microsoft (Score:4, Insightful)
Microsoft is a for-profit business with it's own search engine division and provides a product that could drive revenue to that business.
The Mozilla Foundation is a non-profit organization that provides financial support to the open source Mozilla project that has a product that drives revenue to Google in a deal inked where they have exclusive rights to being the default during installation in return for donating to the Mozilla Foundation.
I just don't see how the striking difference between those two scenarios could be more plain. I'll boil it down for those that can't:
Internet Explorer/Microsoft is a self-interest driven scenario.
Firefox/Mozilla/Google is a mutually beneficial scenario where one party is a business and the other is a non-profit.
As to how this answers your question--remember that Microsoft was convicted of being a Monopoly in the past. Neither Google nor The Mozilla Foundation suffers that burden.
Re:Blame Microsoft (Score:3, Insightful)
Re:Where's the smoke? (Score:3, Insightful)
Re:Using the money (Score:2, Insightful)
The problem with your analogy is that Mozilla DIDN'T spend the money. That, in and of itself, is for profit.
If you have money left at the end of the year, it's profit. No other way to put it.
Google put millions into a non profit, got tax shelter for it. Non-profit DOESN'T spend all the money, non-profit is GOING to get investigated, since they ACTUALLY TURNED A PROFIT.
To get Google as well, they will have to prove collusion. However, if Mozilla has dollars left at the end of they year, that's classified as profit, unless they can show the money being appropriated for something else, and it's just "sitting" waiting for the check to be written, for example.
It's not so much that Google gave a bunch of money to someone else. It's that the someone else got Google a tax break, and the money is NOW just sitting in another businesses account. NOBODY paid tax on that money, and that isn't right.
THAT'S what will come of this, if I read it correctly. It appears Google is using Mozilla as a tax shelter, and the IRS is going after their little shelter, for better or worse.
Happens all the time, only this time it hit some companies that /. agrees with.
--Toll_Free
--Toll_Free
Re:Soooo (Score:3, Insightful)
I don't see anything wrong with it either. There are many instances of charities doing these kind of partnerships. For example the red cross sells its logo to different companies. In fact Johnson&Johnson is suing the red cross for using the red cross trademark in the same market as they are (bandaids, first aid kits, etc.).
And I'm not a big microsoft fan AT ALL but I do see that you really can't condemn microsoft for bundling IE, WMP, etc. with their OS. It seems rather logical and their really isn't anything wrong with that.
I think the EU is a little too strict and I think that is one field that the United States is right. You should really only go fine a company for anti trust when they are hurting the consumer (eg. price fixing) which bundling something for free really isn't.
Re:Soooo (Score:2, Insightful)
It makes sense to invest part (or even most in this case) of the money in case there are no investments forthcoming in the future. While their deal with Google has been extended through 2011, that wasn't always the case, and they still are better off considering the deal lost after 2011, rather than depending on Google to continue dumping cash on them.
Re:Where's the smoke? (Score:3, Insightful)
Re:Google search bar? (Score:3, Insightful)
"but also noted is that over 88% of users will never change default settings"
Don't forget that Google is running at least 80% of the search market, and was before Firefox came onto the scene.
Google is paying them for something that, when looked at from a "what default settings make the most sense for the end-user" point of view, is already the most obvious option. I mean sure, they could set it to Ask.com or Yahoo!, but then they'd just have people asking if they can change it to Google anyway.
Re:Where's the smoke? (Score:4, Insightful)
But there really isn't any difference from a tax perspective if a business donates money, or spends it. It all comes out of net profits, and reduces the tax.