Why Google needs Firefox

Whenever we write a glowing story about Firefox or Mozilla, postbag has a tendency to fill up with letters and missives from concerned readers who are worried about Mozilla’s close ties with Google. Almost the entirety of Mozilla’s income — 97% of $104 million — arrives in the form of royalties from the Firefox search box, and the lion’s share (86%, $85 million) of those royalties are paid by the default search engine: Google.

In November 2011, however, Mozilla’s contract with Google will expire. It will then be renewed… or it will be allowed to lapse.

It is speculated, mostly by tech pundits, that considering the sheer amount of effort that it’s putting into shoving Chrome down our throats, it would not be in Google’s best interests to re-sign with Mozilla. After all, Chrome is one of the largest cogs in the Google machine, and Firefox is its strongest competitor. Why should Big G continue to bolster the saurians of Mountain View when Firefox is stealing and preventing users from installing Chrome?

For one simple reason: money. While it’s true that Mozilla strongly relies on Google’s royalties, don’t forget that Google is completely reliant on search traffic: of the $8.58 billion revenue earned by Google in the first quarter of 2011, 97% of it is derived from advertising. In other words, Google’s status as the default search engine for the majority of 450 million Firefox users directly translates into millions — and possibly billions — of dollars of revenue. It’s the same story with Opera, which regularly holds an auction for its default search engine: search traffic is worth big bucks.

Of course you could argue that Google would be better off spending its $85 million on advertising Chrome or Android, but you have to remember that $85 million is the tiniest drop in Google’s sales and marketing bucket. In the first quarter of 2011 alone, Google spent over $1 billion on ads, almost double what it spent in the first quarter of 2010. If you extrapolate that out to a total of $4 billion for the year of 2011, Mozilla’s $85 million makes up 2% of Google’s total sales and marketing spend. In all likelihood, Firefox is probably the cheapest source of traffic that Google has.

Google’s other problem comes in the shape of Microsoft Bing, which might be making a huge loss ($2.6 billion last year!) but it’s also gaining significant traction both in the US and worldwide territories. If Google fails to renew its contract with Mozilla, do you think that Microsoft would blink an eye at spending $85 million for the majority share of Firefox’s 450 million surfers?

A better question to pose, however, is to turn the entire premise on its head and ask whether Mozilla wants to renew the contract with Google. For the most part, Google and Mozilla have very similar interests, but in recent months some fractures have started to show. Back in 2010, one of Mozilla’s noisiest bigwigs, Asa Dotzler, famously renounced Google because of its poor privacy policy, and started using Bing instead. At the time this wasn’t a big deal, but Dotzler is now the Director of Firefox Desktop — and when November rolls around, it’s safe to assume that he might vote for Bing to replace Google as the default search engine.

If this actually happens — if Bing is suddenly the default search engine for hundreds of millions of surfers — then we’re talking about a monumental shift that would probably redefine the web. To put it into perspective, Microsoft has spent billions on scraping away just a few percent of Google’s massive share to land itself with under 4% of the global search market. For $85 million — or whatever Mozilla decides to charge, because it could charge almost anything — Bing could bolster its global share to 10, 15, or maybe 20%. Google, in return, would lose huge swaths of its market and millions — or billions — of dollars in advertising revenue.



To conclude, Firefox has absolutely no need to worry about its revenue stream. It is Google’s single biggest source of search traffic, and one of the most important components of its entire business — losing Firefox would be a massive blow for Google, not the other way around. More importantly, however, if Bing becomes Firefox’s default search engine in November, the world would finally have a second search engine that might be able to stand up to the overwhelming and indomitable force of Google’s web supremacy.

There would be a beautiful poetic justice if Firefox drops Google, too. Back in 2003 when Mozilla and Firefox first emerged, Microsoft’s Internet Explorer owned 95% of the browser market. Mozilla single-handedly destroyed IE over the next five years and reinvented the web in the process — and now, almost 10 years on, Mozilla might return the favor and help Microsoft break Google’s monopoly.

ExtremeTech

State Of Mozilla

Google 2011 Q1 Earnings



TAKE NOTE, MOST SAVY USERS WILL CHANGE THEIR DEFAULT SEARCH PROVIDER BACK IF THIS HAPPENS