Google And Mozilla Haggle Over Search Toolbar

Mozilla and Google remain locked in active negotiations over their search advertising pact, the two companies have confirmed.

Mozilla drives searches to Google.com from its Firefox web browser search box, for which the search engine giant pays Mozilla a portion of ad revenues generated from those searches. ZDNet’s Ed Bott noted 2 December that the deal was scheduled to end in November after it was renewed three years ago.

Where does that put the agreement today?

“We generally don’t disclose specific terms of business agreements,” a Google spokesperson said via email. “We can confirm that we still have an agreement with Mozilla, but have nothing new to share at this time.”

Over A Barrel?

Ditto, said Mozilla, which issued this statement to eWEEK: “Our search relationship with Google remains positive for both of us. We are in active negotiations and have nothing further to announce at this time. We have every confidence that search partnerships will continue to be a strong and growing generator of revenue for the foreseeable future.”

Confidence is good, because there’s no understating the importance of the deal for Mozilla.The search deal with Google accounted for roughly $100 million (£64m) of Mozilla’s $123 million (£78m) in sales for 2010. That’s a whopping 84 percent.

Without Google’s financial support, Mozilla and the Firefox browser it operates under open source, would be in dire straits. Conversely, the deal yields only incremental revenue for Google, which makes $30 billion (£19bn) a year in advertising.

The Chrome Issue

Google is the fat cat under whose paw the Mozilla mouse is trapped in another way. Google launched its Chrome Web browser in September 2008, or roughly two months before renewing its search deal with Mozilla.

At the time, it looked like Firefox was on its way to garnering 25 percent share, nibbling away at Microsoft’s Internet Explorer share. After an initial quick bump, Chrome growth slowed, but then gradually gained steam.

Chrome now has anywhere from 18 percent to 25 percent market share, depending on whether you believe the more conservative number from Net Applications, or the loftier number from StatCounter.

Meanwhile, Firefox has somewhere between 22 percent (Net Applications) to 25 percent share. Bottom line: Firefox is not growing share, largely because Chrome is eating its lunch.

Google has not acted as if it is out to crush Mozilla in any way other than the rapid ramping of Chrome with faster-to-market feature improvements. It’s a death by 1,000 cuts scenario, but it’s a slow, gentle death.

It seems likely from Google’s and Mozilla’s statements that their deal may be renewed. If not, bloggers such as MG Siegler and Marco Arment said Microsoft’s Bing may be more than willing to step up in Google’s place. Microsoft even launched a version of Bing for Firefox in October, so it’s clear Mozilla isn’t banking solely on Google for business.

Google Assassin?

Moreover, Bing has only 14 percent search share. It has nothing to lose, and perhaps some percentage points of market share to gain from loyal Firefox users.

IDC analyst Al Hilwa told eWEEK that while Chrome will be a bigger browser over time, Firefox is not going away because it has a large number of users who present options and opportunities to monetise.

“Not only does Google not want to be seen as an assassin, but it stands to gain from putting its properties in front of the Firefox user base and it is certainly motivated not to lose this base to Microsoft,” Hilwa said. “Overall, it is better business strategy for Mozilla not to be so reliant on one player for such a large swath of their revenue. I would not be surprised if Microsoft is not also negotiating with Mozilla behind the scenes.”

Indeed, but even if Chrome is nibbling Firefox share, it’s easy to see how Mozilla would want to use Google search, which has 65 percent US market share versus Bing. As a browser maker whose majority income comes from search, Mozilla needs to be where the people are and the people are using Google for search.