Mozilla Revenues Grow, But So Does Dependency On Google

Hundreds of millions of users around the world freely benefit from Mozilla technologies, including Mozilla’s open-source Firefox Web browser, but that doesn’t mean Mozilla isn’t making any money. Mozilla announced its 2012 earnings this week, reporting record revenue of $311 million (£190.3m).

That figure is a far cry from where Mozilla started.

Netscape (remember them?) officially started the Mozilla open-source effort in 1998, buy by 2003, after AOL had acquired Netscape, Mozilla was spun out as its own entity, with some funding from AOL to get started. Within two years of leaving the confines of AOL, Mozilla reported 2005 revenue of $52.9 million (£32.4m)

Google support

The bulk of Mozilla’s first revenue in 2005 came from the same source as it does in 2012 – Google. So even though so very much has changed on the Web and at Mozilla itself over the last seven years, Mozilla’s revenue stream has not.

Mozilla has a search revenue deal with Google that has been renewed multiple times since 2005. The full details of this deal in its various incarnations have never been fully publicly disclosed, but the general premise is that Firefox’s default home screen has Google search as the default, and for every search done from that screen Google pays Mozilla.

As Firefox’s usage has grown since 2005, so too has the revenue—which Mozilla’s financial statements refer to as “royalties.”

Mozilla royalties

“Mozilla receives royalty income from contracts with various search engine and information providers,” Mozilla’s 2012 financial statement document notes. “Revenue from these contracts is determined by the search and information providers based upon end user activity.”

In fiscal 2012, the bulk of Mozilla’s revenue came from royalties totalling $305 million (£187m), up from $162 million (£99m) in 2011. However, Google isn’t Mozilla’s only source of income; individuals and corporate donations are also part of the mix. Mozilla generated $855,000 (£523,000) in contributions during 2012, up from $448,000 (£274,200) in 2011.

Revenues aren’t the only thing on the rise at Mozilla. Expenses are growing too. As should be expected, software development is the group’s top expense, coming in at $149 million (£91m) in 2012, up from $103 million (£63m) in 2011. So doing just a bit of maths, software development expenses grew by 44 percent from 2011 to 2012 while during the same period royalties revenue grew by a staggering 88 percent. What that tells me is that there is still more room for Mozilla to spend on software development activities.

No Plan B?

The continued reliance of Mozilla on Google for the bulk of its revenue is an obvious concern, as it raises the question of what would happen if and when Google ever pulls the plug on the deal. But Mozilla does have a few options. According to its financial statements, Mozilla at the end of 2012 had $121 million (£74m) in various investments. Yes, I know that investment returns are never really guaranteed, but that’s a decent chunk of change that Mozilla has on hand.

The other big effort that could yield future revenue growth for Mozilla is its mobile Firefox OS effort. Today, Firefox OS is not generating any measurable revenue for Mozilla, but I strongly suspect that over time it will. Firefox OS is an alternative to Android and iOS, and it could well be the dark horse in emerging markets around the world.

Despite the hundreds of millions that Mozilla is now earning, it’s important to remember that the company really isn’t a commercial enterprise. The goal of Mozilla is not to make money; it’s to open the Web. Developers and operations do have expenses, so it’s my hope that Mozilla remains true to its mission as it always has and continues to use its wealth to make the Web a better place for us all.

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Originally published on eWeek.