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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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  • To avoid antitrust (Score:3, Insightful)

    by bonch (38532) * on Wednesday December 28, 2011 @06:59PM (#38520442)

    Many took this as charity, and for the purpose of advancing the web.

    Which is absurd. Chrome and Firefox are competing for the same users. Chrome helps Google display ads by directing users to Google services, such as with searches in the address bar. Google and Mozilla are competitors. Remember, you are the product, and advertisers are Google's customers.

    David Ulevitch, founder of OpenDNS, had a more likely hypothesis [twitter.com], which is that Google is protecting itself from increased antitrust scrutiny. Remember that they often display a message on Google.com trying to convince people to download Chrome. Along with Android, Google needs to appear like it's not too dominant.

    Peter Kasting at Google posted a response [google.com], but it focused on claims about Google killing Firefox and didn't actually contradict Ulevitch's thesis on why they paid so much to be Firefox's default search provider. Firefox usage is falling because of Chrome, so it's not like Mozilla (a non-profit) is best pals with Google (a for-profit, multibillion-dollar advertising megacorp). And Mozilla has questioned Google's motives in the past [mozillazine.org] over their refusal to implement Do Not Track in Chrome when all the other major browsers committed to it.

    It's like how Microsoft keeps releasing Office for Mac and various other utilities to make sure the Mac is out there just enough to keep antitrust regulators off its back.

  • by Colin Smith (2679) on Wednesday December 28, 2011 @07:01PM (#38520468)

    No, you're the product.
     

  • by Ynot_82 (1023749) on Wednesday December 28, 2011 @07:09PM (#38520534)

    you're the product.

    Do you not see the irony in this statement, posted to this site....

  • by Anonymous Coward on Wednesday December 28, 2011 @07:12PM (#38520564)

    "'Google started out as a search company. But that's not what they are today. Google's primary business is advertising."

    Funny, I thought they were always an advertising company. The last time it wasn't, to my knowledge, was when it was still hosted at Stanford.

  • Re:No (Score:2, Insightful)

    by bonch (38532) * on Wednesday December 28, 2011 @07:14PM (#38520580)

    Literally 97% of Google's revenue comes from web advertising [gigaom.com]. They're not a search company; the search engine is just one of many mechanisms for displaying ads.

  • by Anonymous Coward on Wednesday December 28, 2011 @07:33PM (#38520776)

    The vast majority of TV stations get their revenue from advertising. That doesn't make NBC an advertising company.

    Wikipedia gets all of their revenue from donations. That doesn't make Wikimedia a donation company.

    You people really need to learn to separate what a company does from how it finances those operations.

  • by Bucky24 (1943328) on Wednesday December 28, 2011 @07:35PM (#38520794)

    Chrome helps Google display ads by directing users to Google services, such as with searches in the address bar.

    And thanks to this deal, Firefox does as well. Chrome and Firefox are competitors, but Google only created Chrome for pushing ads. They don't care if the user seeing the ad is using Chrome, Firefox, IE, or Safari. The user seeing the ad and clicking the ad is all that matters to them. So really they aren't very serious competitors of Mozilla (not saying the competition isn't a serious deal, but that Google doesn't want to seriously compete against them).

  • by jd (1658) <imipak AT yahoo DOT com> on Wednesday December 28, 2011 @07:37PM (#38520810) Homepage Journal

    Who is the post supposed to be a shill for? How is pointing out that Microsoft's support for rival OS' is more likely to be for regulatory purposes than interest in users in any way dubious? Most here know the history of MS Office on the Mac, of MS support within OS/2 being deliberately broken by changes in Windows 3.11? Of sabotage against DR-DOS and other rival systems? Why should we believe Microsoft supports Mac OS/X for anything but blatantly self-serving reasons, when the customers have been trodden on time and again?

    Google's policy of "Do No Evil" is, at best, dubious. I like Google a lot but I would never claim that they are above reproach. Nor should anyone. They have grown at a fantastic rate, to the point where their share price has been known to dip whenever they exceed official revenue expectations by a smaller factor than usual. I'm willing to accept that their initial growth was merely through cost-effective engineering, but their applications have a high degree of tie-in and Google certainly leverages one to get traction with another. The chances of there being anti-trust potential should not be ignored and the chances that they're covering themselves (rather than their users) are not insignificant. We should take the possibility seriously.

  • by Chuck Chunder (21021) on Wednesday December 28, 2011 @08:02PM (#38521042) Homepage Journal

    Firefox usage is falling

    It would be interesting to know if this were true, not as a percentage of the market but in terms of total volume (number of users, number of searches done using Firefox, ie something actually somewhat relevant to how Google derives revenue).

    People seem to focus a lot on market share but I think it's a largely irrelevant metric for doing anything other than cheerleading. After all, you can apparently run a viable business [opera.com] based on a single digit browser market share. Given the astonishingly large number of people using the web this shouldn't be surprising but people seem to look at the percentages and forget the volume.

    300 million sounds like a lot of money (because it is!) but it would seem to be less than a dollar per Firefox user per year. Would Google expect to derive more than a dollars worth of revenue per user over a year on average? It doesn't sound like a fundamentally unreasonable proposition (and Google should have the metrics to know, it would not be much of a gamble for them).

  • Safari (Score:4, Insightful)

    by Johnny Mnemonic (176043) <mdinsmore@gma[ ]com ['il.' in gap]> on Wednesday December 28, 2011 @08:39PM (#38521314) Homepage Journal

    If you thought that was a lot, wait until you see what Google will have to pay for primary placement in Safari. I don't recall when that deal is up, but you can bet that Apple is going to be all too happy to stick it to Google for pilfering the iphone design for use in Android hardware.

    Apple has a tremendous thing going with iPhone and IPad sales. They're none to happy that Google is trying to rock that boat. I expect Apple to force Google to pay dearly for placement, Apple will be just as happy to switch to Bing.

    btw, if you thought Bing's existence was a waste of energy, it was built for exactly this kind of forcing costs up on competitors. It doesn't have to be widely used, it just has to be a credible threat so Google is forced to pay more than it otherwise would have.

    Does a surprise increase of 300% to Mozilla mean that they are going to be able to hire more developers, and build/iterate faster?

  • by DragonWriter (970822) on Wednesday December 28, 2011 @08:48PM (#38521410)

    Which is absurd. Chrome and Firefox are competing for the same users.

    As long as Google is the primary search provider in Firefox, and as long as Mozilla is actually pursuing its statement mission of advancing the open web, Chrome and Firefox are both places where Google is spending money to an getting the same basic thing for the money:
    1) Direct promotion of google's search advertisement revenue through placement as the default search provider, and
    2) Indirect promotion of the market for a wide range of Google's for-pay services (including search and non-search advertisement, application hosting through App Engine, and others) by making open web technologies a more attractive application platform and the web a place where users spend more time.

    David Ulevitch, founder of OpenDNS, had a more likely hypothesis, which is that Google is protecting itself from increased antitrust scrutiny.

    A whole lot more plausible of a hypothesis is that Google is spending money in the search deal to advance is direct and immediate revenue stream from search advertisements, and that the indirect benefits to its strategic interests in its other revenue sources are a reason that Google is willing to spend more for that advertising revenue than other bidders, particular Microsoft, who don't share Google's other interests in Mozilla.

    Antitrust concerns are a pretty ridiculous hypothesis for Google investment in Mozilla, since Mozilla doesn't compete with Google anywhere where Google is dominant.

  • by Locutus (9039) on Wednesday December 28, 2011 @09:13PM (#38521662)
    they purchased Java products and companies in bidding wars with Sun and Netscape only to shut them down. ie they were purchased at a high cost to get useful Java apps and tools off the market. As for Google, they benefit from an open market and not a closed Microsoft or Apple market. And we benefit from that too.

    LoB
  • by 517714 (762276) on Wednesday December 28, 2011 @09:36PM (#38521834)
    It's "don't be evil."
  • by DocHoncho (1198543) * <.moc.liamg. .ta. .ohcnohcod.> on Wednesday December 28, 2011 @10:44PM (#38522332) Homepage

    I dunno, at my last job I had to do a number of "rebuilds" as they called it on machines from XP to Win7 and IE 8/9 would always pester me to do the initial preference setup, but whenever I tried (just for grins) the link took me to an incomprehensible mess of an "app store" and it was up to me to dredge Google from the morass.

    I could never quite tell if it was Microsoft being underhanded and hiding the other options, or just plain old fashioned incompetence, by which I mean plain old fashioned Microsoft-ness.

    The only reason I even started IE in the first place was to replace it, so I usually just said "Remind me later" or whatever the relevant option is.

  • by InterestingFella (2537066) on Wednesday December 28, 2011 @10:56PM (#38522398)

    Google and Firefox are not competitors. Competitors don't go buying each-other products.

    Yes they do. The most obvious example being mobile phone and tech world. There are only a few companies in the world that own fabs so all companies are buying parts from them. Even when they have competing products overally, ie. they both sell smart phones. For example Samsung owns fabs that do parts for Apple, even while they both also sell phones.

    It's business, it's not a bitter relationship with an ex-gf. Competing businesses can do business when it suits them while still competing in slightly relevant area without personal feeling getting in the way.

  • by Animats (122034) on Wednesday December 28, 2011 @11:44PM (#38522648) Homepage

    Once upon a time, search was an expensive, high-end service, sold by companies like Nexis/Lexis and Mead Data Central. Then it looked like search might be something you paid for with your ISP bill, like premium cable. Then it was free, supported by ads, but users had go to to the search site. Search engines competed on search result quality, which is how Google beat Lycos, Yahoo, and AltaVista. Now Google has to pay cash for traffic flow. Search now has negative market value.

    This is striking. TV networks have never had it that bad. US cable networks pay for their channels, at the rate of $0.03 to $0.25 per subscriber per month [museum.tv] for most of what's on basic cable. Some channels do pay for access to cable networks, but that's for ad-heavy junk like the Jewelry Channel.

    This may be an indication that search results are now too ad-heavy. That's a bad place to be. Myspace went there, and crashed from hero to zero in three years.

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