Slashdot Mirror
Did Microsoft Make Google Pay Triple Rate To Mozilla?
SharkLaser writes "Last week it was announced that Google has renewed their search deal with Mozilla. The amount Google paid to Mozilla was surprising: $300 million per year, despite the slightly falling market share of Firefox. Many took this as charity, and for the purpose of advancing the web. Now sources in the bidding process have revealed that Google's main rival in the bid was Microsoft's Bing, along with Yahoo. This bidding war was costly to Google, which is now paying 300% of what they used to, just to be Firefox's default search provider. Mozilla veteran Asa Dotzler is also giving insight into the deal between Google and Mozilla. 'Google started out as a search company. But that's not what they are today. Google's primary business is advertising. Google brought in $9.7B in revenues in Q3'11. 96% of that revenue was from ad sales. Not all traffic to Google ads is 'organic' though. To help drive ad sales, Google pays for traffic to their ads. They paid out $2.21 billion, or 24% of their ad revenues in 'Traffic Acquisition Costs.' That money goes to revenue shares with their AdSense partners and to 'distribution partners' — presumably browser makers, PC OEMs, and mobile OEMs and operators.' Google also pays shareware and freeware distributors to bundle Chrome and Google toolbar with their programs and games."
Which is absurd. Chrome and Firefox are competing for the same users. Chrome helps Google display ads by directing users to Google services, such as with searches in the address bar. Google and Mozilla are competitors. Remember, you are the product, and advertisers are Google's customers.
David Ulevitch, founder of OpenDNS, had a more likely hypothesis, which is that Google is protecting itself from increased antitrust scrutiny. Remember that they often display a message on Google.com trying to convince people to download Chrome. Along with Android, Google needs to appear like it's not too dominant.
Peter Kasting at Google posted a response, but it focused on claims about Google killing Firefox and didn't actually contradict Ulevitch's thesis on why they paid so much to be Firefox's default search provider. Firefox usage is falling because of Chrome, so it's not like Mozilla (a non-profit) is best pals with Google (a for-profit, multibillion-dollar advertising megacorp). And Mozilla has questioned Google's motives in the past over their refusal to implement Do Not Track in Chrome when all the other major browsers committed to it.
It's like how Microsoft keeps releasing Office for Mac and various other utilities to make sure the Mac is out there just enough to keep antitrust regulators off its back.
No, you're the product.
Deleted
This is free-market capitalism working. Supply is constant (there's only one Firefox), but demand increased (Bing wanted in on the traffic). Therefore prices increased.
And it's even good for the consumer. "Default search provider" can't really hurt the consumer, as long as they're free to change it (and they are). Meanwhile, this provides funding to one of the few open-source brands. Firefox isn't just a browser - it managed to build a respect and legitimacy as a product in a world dominated by closed-source, and it built that legitimacy with regular desktop users, not IT people. Mozilla could make a music e-store, or a netbook line, or an operating system, and it would share that perception of legitimacy, of the brand identity. Not many open-source non-profits can say the same.
Keeping an open-source brand alive is worth it.
"'Google started out as a search company. But that's not what they are today. Google's primary business is advertising."
Funny, I thought they were always an advertising company. The last time it wasn't, to my knowledge, was when it was still hosted at Stanford.
Literally 97% of Google's revenue comes from web advertising. They're not a search company; the search engine is just one of many mechanisms for displaying ads.
If you are the product, you are entitled to be sold. Money goes to the producer. Or Trader. They will feed you well, if you incorporate value.
Is why Firefox doesn't have all it's problems worked out with an operating budget of at least 100 million dollars a year, one would hope that with an additional 200 million dollars a year, they will really start making heads turn towards, and not away from, their product.
Yes it is. 50% of 100 million is 50 million, 100% of 100 million is 100 million, and 300% of 100 million is 300 million. "Of" in this context means multiplied by.
Perhaps you're confused by "300% of" as opposed to "increased 300%"? - it's a 200% increase, or 300% of the original value.
When was the last time you installed / upgraded IE... it prompts to set defaults to all Microsoft or "Allow me to select my own defaults"... selecting the 2nd option opens a tab for each "accelerator"... from there Google is really easy to select for search, blogs, email, etc. It's been that way since IE8 and the massive anti-trust lawsuits in Europe.
It would be interesting to know if this were true, not as a percentage of the market but in terms of total volume (number of users, number of searches done using Firefox, ie something actually somewhat relevant to how Google derives revenue).
People seem to focus a lot on market share but I think it's a largely irrelevant metric for doing anything other than cheerleading. After all, you can apparently run a viable business based on a single digit browser market share. Given the astonishingly large number of people using the web this shouldn't be surprising but people seem to look at the percentages and forget the volume.
300 million sounds like a lot of money (because it is!) but it would seem to be less than a dollar per Firefox user per year. Would Google expect to derive more than a dollars worth of revenue per user over a year on average? It doesn't sound like a fundamentally unreasonable proposition (and Google should have the metrics to know, it would not be much of a gamble for them).
Boffoonery - downloadable Comedy Benefit for Bletchley Park
If I'm the "product," wouldn't that mean I'm entitled to some form of compensation (preferably monetary)?
You think they give you free access to Gmail, Chrome, etc. out of the goodness of their corporate heart?
#DeleteChrome
Google has a revenue of sth like 30Billion/year. 60% of that is on their websites and i presum something like 40% comes from firefox users, which (according to my habit) mostly comes from the built-in search. Now lets say 50% of the revenue on the google websites is search-related. That makes 12% of 30Billion$ which could be lost. Lets say half of the people åre too lazy to change the default search engine, so we are talking about a loss probably larger than 1.5 Billion.
So paying 300Million seems a reasonable decision to me.
I don't think that's accurate. What would be more accurate is that many media outlets have misrepresented various Googler's comments that what Google pays Mozilla advances Google's interest in the open web, and that that is one reason why Google would continue to funnel lots of money to Mozilla even though it has its own browser which competes directly with Firefox as a claim about "charity".
That claim has nothing to do with charity, its a statement that is about revenue -- largely ad revenue, but also revenue from Google's other services -- because the more happy people are with doing things on the web (whether new things or things they previously would use desktop apps or non-web technologies for) the bigger the market is for online advertising, web application hosting, and all kinds of other services Google provides for a price. And the more the web uses open standards to do that, the more Google's various services that rely on scraping, analyzing, and summarizing data from across the web can do.
There's also, of course, the direct search ad revenue that Google derives from use of their products in search, which is the most direct and visible reason they would pay Mozilla to be the default Firefox search provider. And of course that's important, too. But their strategic interest in making the web friendlier to promote their whole host of services (which is still mostly advertising, but not all of that advertising is search advertising) is why they are consistently willing to pay more to be the default search provider in Firefox than Microsoft, for whom promoting the open web isn't a strategic interest in the way it is for Google. Because Google sees a return beside the direct search revenue that Microsoft doesn't, because Google's long-term business interest are more closely aligned with Mozilla's ideological interests.
If you thought that was a lot, wait until you see what Google will have to pay for primary placement in Safari. I don't recall when that deal is up, but you can bet that Apple is going to be all too happy to stick it to Google for pilfering the iphone design for use in Android hardware.
Apple has a tremendous thing going with iPhone and IPad sales. They're none to happy that Google is trying to rock that boat. I expect Apple to force Google to pay dearly for placement, Apple will be just as happy to switch to Bing.
btw, if you thought Bing's existence was a waste of energy, it was built for exactly this kind of forcing costs up on competitors. It doesn't have to be widely used, it just has to be a credible threat so Google is forced to pay more than it otherwise would have.
Does a surprise increase of 300% to Mozilla mean that they are going to be able to hire more developers, and build/iterate faster?
--
$tar -xvf
I hope it means that Mozilla foundation can now afford to pay to put the reload button back where it belongs.
Have you got your LWN subscription yet?
they purchased Java products and companies in bidding wars with Sun and Netscape only to shut them down. ie they were purchased at a high cost to get useful Java apps and tools off the market. As for Google, they benefit from an open market and not a closed Microsoft or Apple market. And we benefit from that too.
LoB
"Anyone who stands out in the middle of a road looks like roadkill to me." --Linus
they competed with Microsoft to fund Firefox, a free browser which runs on arguably ALL platforms. WTF are you crying about.
Do you really think that it would have been better to let Mozilla be beholden to Microsoft? As if there isn't reams of court docs which show they would likely try to make it only run on Windows.
I would rather Google be there than Microsoft since Google got where they got in the search engine biz by being better than everyone else. If Google had even a pinch of the history Microsoft has I would be saying this agreement with Mozilla was bad for users but they don't and the Google search engine is still quite good.
LoB
"Anyone who stands out in the middle of a road looks like roadkill to me." --Linus
I dunno, at my last job I had to do a number of "rebuilds" as they called it on machines from XP to Win7 and IE 8/9 would always pester me to do the initial preference setup, but whenever I tried (just for grins) the link took me to an incomprehensible mess of an "app store" and it was up to me to dredge Google from the morass.
I could never quite tell if it was Microsoft being underhanded and hiding the other options, or just plain old fashioned incompetence, by which I mean plain old fashioned Microsoft-ness.
The only reason I even started IE in the first place was to replace it, so I usually just said "Remind me later" or whatever the relevant option is.
Celebrity worship is a poor substitute for Deity worship and costs more to boot.
Once upon a time, search was an expensive, high-end service, sold by companies like Nexis/Lexis and Mead Data Central. Then it looked like search might be something you paid for with your ISP bill, like premium cable. Then it was free, supported by ads, but users had go to to the search site. Search engines competed on search result quality, which is how Google beat Lycos, Yahoo, and AltaVista. Now Google has to pay cash for traffic flow. Search now has negative market value.
This is striking. TV networks have never had it that bad. US cable networks pay for their channels, at the rate of $0.03 to $0.25 per subscriber per month for most of what's on basic cable. Some channels do pay for access to cable networks, but that's for ad-heavy junk like the Jewelry Channel.
This may be an indication that search results are now too ad-heavy. That's a bad place to be. Myspace went there, and crashed from hero to zero in three years.