IRS Looking at Google/Mozilla Relationship

ric482 writes "With the release of the Mozilla Foundation's 2007 financial report, questions have been raised by the IRS, who are due to perform an audit on the non-profit organization behind the massively popular Firefox browser. Last year, the Foundation received $66 million of its total $75 million revenue (88 percent) from search engine maestros Google, so the IRS are looking for blood over the organization's tax exempt status. Back in 2006, Mozilla got $59.5 million from Google — around 85 percent of the organization's revenue. Google and Mozilla are part of a 'you scratch my back, I'll pay your bills' sort of agreement, with the Google search bar firmly placed in the toolbar, and on the default homepage. Things were a bit rocky a couple of months back when Google unveiled the Beta-run of its Chrome browser, but Mozilla and Google hugged it out and sealed a deal that will last for another three years. That deal will expire in November 2011."

Comments

Link?

[VisualD]

Would it kill you to put a link in there somewhere?
http://www.mozilla.org/foundation/documents/mf-2007-audited-financial-statement.pdf

nothing wrong with corp. support for OpenSource

[AlphaZeta]

To me, there shouldn't be much a fuss about big corporates supporting open source. In fact, I think there should be more involvement (financially) for those big companies who no doubt have benefited from the open source community. As long as the licensing remains open source, everything is transparent...

Re:nothing wrong with corp. support for OpenSource

[TheRaven64]

This money isn't exactly supporting open source. It goes to the Mozilla Foundation, which employs a few developers, but most of the money remains unspent and a big chunk goes on advertising and paying board members.

Re:nothing wrong with corp. support for OpenSource

[TheRaven64]

So, 72% invested, 6.7% in marketing, and 21% on development? Or, to put it another way, a third as much spent on marketing as on development? I can't think of many companies (big pharmaceuticals excepted) that have this high a ratio of marketing to product development spending.

It's probably not a bad idea that they're spending less than a third of their income, since it means that they can keep up this rate of expenditure during several years of economic down-turn irrespective of what their income does, but it does mean that, at the moment, only 21Â of every dollar that Google is paying to the foundation actually goes to improving the browser. With this in mind, developing their own browser probably made a lot of commercial sense.

Soooo

[zifferent]

They give away the browser and spend all of their revenue on development. So, how much taxable profit did the Mozilla foundation make anyway? The IRS has nothing to gain from this. I smell a rat closeby!

Re:Soooo

[Andr T.]

There's a lot of money there. I think audits on those cases are common and I guess there's nothing to be afraid of.

Re:Soooo

[Jellybob]

I've never really wondered that. The OEMs are buying Windows licenses in batches of several thousand, on a regular basis.

It's standard business practice to give discounts to customers who provide you with a large, regular, income.

Why go after Mozilla?

[Andr T.]

...and not after some other fictional 'non-profit' organizations?

Wow

[elrous0]

85% of Mozilla's funding comes directly from Google?!? For all practical purposes, Google basically owns them. No wonder Mozilla was so forgiving of Chrome.

Re:Blame Microsoft

[pipatron]

but that's OK because it's the same company?

Exactly. The issue here is that Mozilla Foundation is a non-profit organization, but Google clearly is not. Presumably IRS could be interested in exactly how close ties they have.

Re:Yea, microsoft is guiltless on this one too

[Splab]

How on earth did you get modded insightful for that piece of fear mongering?

Mozilla knew this might be coming - they put money aside for this eventuality already in 2003. But nice try.

Where's the smoke?

[Dare nMc]

Since Google is a profitable entity isn't this tax neutral to google? IE if Google and mozilla merged, and Google spent the same amount on development, and giving as mozilla does, google would have the same profit, and thus pay the same taxes. The only difference would be some of the last 15% (non google contributions.) Since individuals can write off gifts to Mozilla foundation, but not to google then that's the money the IRS is chasing, not googles portion of the pie.

Re:Where's the smoke?

[Chapter80]

And that would mean Google shouldn't be using the donation as a tax deduction.

But there really isn't any difference from a tax perspective if a business donates money, or spends it. It all comes out of net profits, and reduces the tax.

Stop the Debian Bullshit

[CritterNYC]

Honestly, stop with the Debian bullshit already. Mozilla doesn't want others altering their software and still keeping their trademarks intact (which is what Debian wants to do). Debian places the *EXACT* same restrictions on their own trademarks.

Re:Blame Microsoft

[div_2n]

Microsoft is a for-profit business with it's own search engine division and provides a product that could drive revenue to that business.

The Mozilla Foundation is a non-profit organization that provides financial support to the open source Mozilla project that has a product that drives revenue to Google in a deal inked where they have exclusive rights to being the default during installation in return for donating to the Mozilla Foundation.

I just don't see how the striking difference between those two scenarios could be more plain. I'll boil it down for those that can't:

Internet Explorer/Microsoft is a self-interest driven scenario.

Firefox/Mozilla/Google is a mutually beneficial scenario where one party is a business and the other is a non-profit.

As to how this answers your question--remember that Microsoft was convicted of being a Monopoly in the past. Neither Google nor The Mozilla Foundation suffers that burden.