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Did Microsoft Make Google Pay Triple Rate To Mozilla? 248

Posted by samzenpus
from the jacking-up-the-price dept.
SharkLaser writes "Last week it was announced that Google has renewed their search deal with Mozilla. The amount Google paid to Mozilla was surprising: $300 million per year, despite the slightly falling market share of Firefox. Many took this as charity, and for the purpose of advancing the web. Now sources in the bidding process have revealed that Google's main rival in the bid was Microsoft's Bing, along with Yahoo. This bidding war was costly to Google, which is now paying 300% of what they used to, just to be Firefox's default search provider. Mozilla veteran Asa Dotzler is also giving insight into the deal between Google and Mozilla. 'Google started out as a search company. But that's not what they are today. Google's primary business is advertising. Google brought in $9.7B in revenues in Q3'11. 96% of that revenue was from ad sales. Not all traffic to Google ads is 'organic' though. To help drive ad sales, Google pays for traffic to their ads. They paid out $2.21 billion, or 24% of their ad revenues in 'Traffic Acquisition Costs.' That money goes to revenue shares with their AdSense partners and to 'distribution partners' — presumably browser makers, PC OEMs, and mobile OEMs and operators.' Google also pays shareware and freeware distributors to bundle Chrome and Google toolbar with their programs and games."
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Did Microsoft Make Google Pay Triple Rate To Mozilla?

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  • by gman003 (1693318) on Wednesday December 28, 2011 @07:09PM (#38520538)

    This is free-market capitalism working. Supply is constant (there's only one Firefox), but demand increased (Bing wanted in on the traffic). Therefore prices increased.

    And it's even good for the consumer. "Default search provider" can't really hurt the consumer, as long as they're free to change it (and they are). Meanwhile, this provides funding to one of the few open-source brands. Firefox isn't just a browser - it managed to build a respect and legitimacy as a product in a world dominated by closed-source, and it built that legitimacy with regular desktop users, not IT people. Mozilla could make a music e-store, or a netbook line, or an operating system, and it would share that perception of legitimacy, of the brand identity. Not many open-source non-profits can say the same.

    Keeping an open-source brand alive is worth it.

  • Re:300%? (Score:5, Informative)

    by bjorniac (836863) on Wednesday December 28, 2011 @07:40PM (#38520844)

    Yes it is. 50% of 100 million is 50 million, 100% of 100 million is 100 million, and 300% of 100 million is 300 million. "Of" in this context means multiplied by.

    Perhaps you're confused by "300% of" as opposed to "increased 300%"? - it's a 200% increase, or 300% of the original value.

  • by Anonymous Coward on Wednesday December 28, 2011 @07:54PM (#38520964)
    When was the last time you installed / upgraded IE... it prompts to set defaults to all Microsoft or "Allow me to select my own defaults"... selecting the 2nd option opens a tab for each "accelerator"... from there Google is really easy to select for search, blogs, email, etc. It's been that way since IE8 and the massive anti-trust lawsuits in Europe.
  • by similar_name (1164087) on Wednesday December 28, 2011 @08:16PM (#38521152)

    Chrome has been gaining share at Firefox's expense,

    Really? [wikipedia.org]

  • by asa (33102) <asa@mozilla.com> on Wednesday December 28, 2011 @08:27PM (#38521228) Homepage

    Mozilla is building an open standards-based API for apps that allow app developers to develop once and run anywhere. Have a look here for a preview. We'll be investing considerably more in this project in the coming year. See more here https://apps.mozillalabs.com/ [mozillalabs.com]

    And no, Mozilla would absolutely not sacrifice something fundamental to our Mission for revenue. See more here http://www.mozilla.org/about/mission.html [mozilla.org]

  • by Daniel Phillips (238627) on Wednesday December 28, 2011 @08:29PM (#38521250)

    ...Google only created Chrome for pushing ads.

    Absolutely true, and with a secondary goal of breaking the power of a GPL code base over which they do not have complete control. Now, Google finds itself in a position of paying $300/million to support a GPL code base, over which they do not have complete control (restated for emphasis). What an excellent situation: mandatory doing of non-evil. It's actually better for Google, and better for us, when Google does non-evil like this. I fear greatly a scenario where Google has complete control of the non-copyleft code base of the dominant web browser. In that situation, I do not believe that Google would be able to resist the temptation to do evil, perhaps just minor evil at first, and later, not minor at all.

    That said, I wish that Mozilla foundation would take, say, one of those $300 millions and spend it on replacing Gecko by webkit, putting its own fork of webkit under GPL. As far as I can see, that simple strategy alone would ensure Mozilla never becomes irrelevant, and that neither Apple nor Google can effectively take webkit private, which is a clear and present danger at the moment.

  • by asa (33102) <asa@mozilla.com> on Wednesday December 28, 2011 @08:33PM (#38521272) Homepage

    No "number was revealed. "What you're referring to is speculation from a well respected reporter based on what she heard from her sources. Neither Google nor Mozilla have confirmed it.

    Mozilla is open about pretty much everything you can imagine. The only two areas where we are not totally transparent are some employment issues and business dealings where our partners would not partner with us if we tried to force transparency on them.

    Mozilla does release financials every year so you can see what revenue we generated and where we spent it. That makes it sort of possible to see what specific deals look like in broad terms but no matter how much we'd like to, we simply can't force transparency on other companies.

  • by DragonWriter (970822) on Wednesday December 28, 2011 @09:01PM (#38521536)

    Chrome and Firefox are competitors, but Google only created Chrome for pushing ads.

    I doubt that. Most likely, Google created Chrome and its specific features to push the browser market in a direction that favored web-based replacements for desktop application -- you'll note that, in addition to advertisements, Google sells both its own web-based services and a hosting platform for third-party web-based services, and has consistently used Chrome to push technologies designed to address barriers to web services displacing traditional desktop apps (and also on enabling new kinds of web apps besides areas where desktop apps are popular.) JavaScript performance was the big area that was a focus when Chrome was launched, though the focus has moved somewhat from JavaScript performance as such to support for a broader range of APIs that push into non-traditional web roles (e.g., WebGL) and non-JavaScript application options (particularly Native Client), but still largely focus on browser-as-app platform.

    Google created Chrome to push Google's (current and planned) revenue-generating services, but that's more than just advertising, and I would say that Chrome exists disproportionately to push Google's non-advertising services (though, of course, it doesn't miss the easy opportunity to directly push Google advertising, either.)

  • by icebike (68054) * on Wednesday December 28, 2011 @09:54PM (#38521940)

    At the prior funding level, (100 million per year) Google accounted for nearly 100% or Mozilla.org's budget.

    This story is about Google getting suckered in a bidding war to the the default (but NOT the only) search engine in the top-bar. Anyone can change the default at any time. The agreement is performance based, capped at 300 mil. If Firefox search hits falls they won't make the full 300 mil.

    So if prior agreement paid 100% of development costs, and if Firefox can keep its market share up, they should have three times their development budget to add astounding new features, fix up their physical infrastructure and harden their browser and plugins. They now can afford the manpower. The ball is in their court.

    I'm pretty sure Google isn't worried about Chrome market share here. They get the advertising dollars either way.

  • by asa (33102) <asa@mozilla.com> on Wednesday December 28, 2011 @11:49PM (#38522660) Homepage

    Mozilla Firefox users and usage is increasing. For the last year or so it hasn't outpaced the growth of the Web, but it is certainly increasing in absolute terms. I don't have the graphs in front of me but it's tens of millions of additional Firefox users so far this year.

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