Mozilla's search revenue jumps 31%, likely due to nearly $1B Google deal

Browser maker may be banking an extra $16.4M each month from 2011's three-year agreement

Mozilla today said that income from search partners climbed 31% last year, hinting at the reportedly lucrative deal the open-source foundation struck with fierce browser rival Google.

Royalties, almost all of which come from search services like Google, Microsoft, Yahoo and others, were $161.9 million, up by nearly a third from 2010's $123.2 million.

Nearly all the Mozilla Foundation's 2011 revenue came from search providers, which paid the organization for leading Firefox users to their websites. In 2011, royalty payments accounted for 99% of the year's income, slightly lower than the share of Mozilla's revenue attributed to search in the last three years, when losses in other areas, such as the organization's investments or currency exchanges, pushed total income below that of royalties.

Mozilla Foundation is the not-for-profit organization that oversees Mozilla Corp., the commercial firm that develops Firefox for desktop and notebook PCs and Macs, and Android smartphones.

According to the audited financial statement ( download PDF) released Thursday, total revenues for 2011 were $163.5 million, up 35% from 2010's $121.1 million.

Historically, Google has accounted for most of Mozilla's search royalties; in 2011, Google's payments made up 85% of the total, or $137.6 million.

Last year's dramatic boost in Google's contribution -- 32.9% over the year before -- was a significant uptick from past years' increases. Google's average annual increase during the five-year period from 2006-2010 was 16.8%, less than half of last year's. Although the boost could have been due to more Firefox users, it seems unlikely, as the browser's share of the global market has slipped 16% in the last 12 months, according to Web metrics firm Net Applications.

The more likely reason: The three-year search agreement that Mozilla and Google signed late last year.

According to reports, the new deal required Google to pay Mozilla almost $300 million annually to keep its search engine the default in Firefox. Mozilla's revenue from its search deals -- primarily the one with Google -- jumped 31% in 2011 to about $162 million. (Date: Mozilla Foundation.)

The two companies acknowledged the new contract in late December 2011; both declined to comment on the specifics of the deal, or confirm the $300 million annual payment.

If the agreement was dated retroactively to the November expiration of the previous contract -- Mozilla never dropped Google as Firefox's default during the interval between the end of the earlier contract and the announcement of the renewal -- the new deal could have accounted for the bulk of the royalty revenue increase.

In 2010, Google paid Mozilla an estimated $103 million, meaning that the new agreement would increase Mozilla's revenue by $197 million each year, or about $16.4 million per month. Revenue from Google in 2011 was up $34.1 million over 2010, or almost exactly two months worth of the search giant's larger payments.

But Mozilla faces tougher times ahead. Traditional desktop and notebook browsing has slackened as people reach the Internet from smartphones and tablets, devices where Firefox has a minor presence.

Mozilla has created an Android version of Firefox, but its share is so small it isn't even measurable by Net Applications. Nor has Mozilla crafted Firefox for iOS, which controls the bulk of smartphone and tablet browsing. The organization had declined to do so because of Apple's stringent rules that require other browsers to use iOS' built-in WebKit rendering engine.

Yet mobile's share of all browsing has been steadily growing, with mobile's portion setting a new record of 10% in October.

And Firefox OS has yet to bear fruit, although the organization has promised the browser-based mobile operating system will debut in early 2013 on inexpensive smartphones from a pair of Chinese manufacturers. Mozilla has also lined up several carriers, including Sprint in the U.S., Germany's Deutsche Telekom, Italy's Telecom Italia and Spain's Telefonica, to sell devices powered by Firefox OS.

This story, "Mozilla's search revenue jumps 31%, likely due to nearly $1B Google deal" was originally published by Computerworld.

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