Mozilla on Wednesday announced that it had not renewed its lucrative contract with Google, but instead will use Yahoo as Firefox's default search engine in the U.S.
And rather than have a global designated search partner -- as it has had with Google in nearly all markets for a decade -- Mozilla will instead strike country-by-country deals.
Mozilla implied that the change from one to many search partners would result in better ideological alignments, but said nothing about revenue potential. "In evaluating our search partnerships, our primary consideration was to ensure our strategy aligned with our values of choice and independence, and positions us to innovate and advance our mission in ways that best serve our users and the Web," said Chris Beard, Mozilla's CEO since July.
Mozilla's self-professed mission -- now centered around the tag of "independence" -- has been to push for a more open Web, first with its Firefox browser, which dislodged Microsoft's Internet Explorer (IE) from its once-overwhelming dominance, then later morphed into a call for more open everything, including mobile ecosystems. It has also taken up broader issues, including user privacy, government surveillance and data encryption.
The move away from Google wasn't surprising given the hints Mozilla has dropped recently, including thinly-veiled criticism of both Google and Apple from Mozilla's chairwoman, Mitchell Baker, last week.
"A choice of device will determine much of your online experiences -- the software and content available to you, what payment systems you can use, where your data goes, which if any of your data you can manage, the way you identify yourself to the world," Baker wrote in a blog post on Nov. 10. "People and businesses are able to innovate within the frameworks determined by larger businesses. One can only act as you're given permission. Frankly, this direction for the Internet sucks."
At the same time, Mozilla rolled out a Firefox update that offered privacy-focused DuckDuckGo as a search engine choice, another clue that it would dispense with Google. "DuckDuckGo gives you search results without tracking who you are or what you search for," Johnathan Nightingale, vice president of Firefox, said last week. "Other engines may use tracking to enhance your search results, but we believe that's a choice you should get to make for yourself."
Nightingale did not mention Google by name as one of the engines that "use tracking," but the Mountain View, Calif. company has been hammered by privacy advocates for the tracking it does to present pertinent in-browser advertisements.
Some analysts believed that Mozilla's switcheroo to multiple partners -- it will restore Yandex Search in Russia, for instance, after dumping it in 2012 -- will bring in more money. "Mozilla realized they could make more money by splitting up defaults by region instead of signing a single global deal," opined Ben Thompson in his Thursday Daily Update to paying subscribers of Stratechery.com.
Thompson was certain that for all of Beard's ideological rationales, dropping Google and, in the U.S., picking Yahoo, was really about dollars and cents.
"Total bullshit. This was clearly all about the money," Thompson said of third-party commentary that put the decision down to dogmatic differences between Mozilla and Google.
Other takes were more nuanced. Jack Dawson, principal analyst at Jackdaw Research, saw elements of both philosophy and finance in Mozilla's decision. "It would not have walked away from Google absent interest by others," Dawson said in an interview today.
Mozilla's choice of search partners was important because of the unusual way the non-profit generates the bulk of its income. In 2012, the last year for which Mozilla has reported its finances, search-generated revenue accounted for 98% of the total. Most of Mozilla's income -- 88% -- came from the Google deal, which provided $274 million of the total $311 million.
According to Dawson, the money Google paid to Mozilla in 2012 was about 12% of the former's total traffic acquisition costs from distribution partners. Traffic from Firefox produced billions in Google revenue; by one rough estimate based on financial records, Google generated more than $4 billion from Firefox-originating traffic.
But Mozilla's contribution may have been less attractive to Google over time as Firefox's share of all browser users has declined -- according to metrics firm Net Applications, Firefox's desktop user share has fallen 37% since the late-2011 contract the two signed. And Mozilla has an almost invisible user share on mobile, even though it distributes an Android browser and has launched Firefox OS, a free mobile operating system.
In the meantime, Google has seen its user share of Chrome on the desktop and in mobile climb organically: Chrome's desktop share rose 17% since November 2011, when it and Mozilla struck their last three-year deal.
In other words, it's possible that Google was the party that bailed out, even though Mozilla claimed it was the one to walk away. "We have decided to not renew our agreement for global default placement [with Google]," Beard said Wednesday.
And Yahoo may have been the only alternative, as unlike Google and Microsoft, which both have browsers of their own and search engines, Yahoo lacks the former, reducing partner friction. "I suspect Mozilla might have been willing to accept the same or slightly less from Yahoo," said Dawson.
That's why some pundits have characterized the Mozilla-Yahoo marriage as one of the weak. "Given Yahoo's search share of 9% in the U.S. and Mozilla's [global] share of 14%, and the reluctance of people to change defaults in their browsers, Yahoo should probably see increasing share from this," said Dawson, betting that there was currently little overlap between the two. But he didn't see the potential gains as significantly changing Yahoo's position in search, or for that matter, Mozilla's shunning of Google impacting that firm's share.
His point on Google's ability to withstand Firefox's desertion as a traffic provider was based on the fact that Apple, not Mozilla, was Google's biggest search partner. Apple uses Google as the default search within iOS, and generates far more revenue for Google than did Mozilla. Only if Apple dumped Google would the latter suffer. And that's not likely to happen.
"I think Apple really got burned with Maps," said Dawson, referring to the 2012 fiasco of rolling out its own mapping and navigation platform. Search is far more important to the overall user experience than mapping, he argued. "Disrupting that could be even more damaging than Maps. I think Apple would think very carefully [about dropping Google's search], and will not do it anytime soon. Instead, Apple is diverting some of those search queries through Siri and Spotlight."
It's probable that Apple receives more than $1 billion annually from Google for driving traffic, said Dawson, pointing out that Google's distribution partner traffic acquisition costs over the last four quarters was approximately $3.5 billion.
"The only thing that could cause more significant damage for Google [than Mozilla's shift] is if Apple switched the default search provider from Google to Bing or Yahoo in Safari," Dawson wrote in a separate analysis published on Tech.pinions today (subscription required).
Mozilla's change to Yahoo in the U.S. -- which Yahoo CEO Marissa Mayer called "the most significant partnership for Yahoo in five years" -- won't necessary rescue the non-profit from what appears to be a downward spiral.
"Mozilla's browser share is likely to shrink over time," contended Dawson. "Because there are more costs to cover moves [like Firefox OS], it's stretched thinner than before. If its share shrinks, it will have less revenue, which means it can spend less on development. That may make its products less appealing to users, so fewer people use them."
Mozilla will roll out Firefox's Yahoo search default next month with a new user interface (UI); the UI will debut in other browsers in early 2015.