Google Paying Mozilla Almost $1B for Firefox Search: Why?

Old news: Google and Mozilla have renewed the partnership that ensures Google's search engine remains Mozilla Firefox's default search tool, and none too soon ? the companies' previous deal expired in November of this year and Mozilla greatly relies on Google's financial support. According to the company's "State of Mozilla" report, Google contributed 84 percent of Mozilla's $123 million revenue in 2010.

What's new, however, is the cost at which Mozilla and Google are now doing business. According to a report by AllThingsD's Kara Swisher, Google will allegedly pay Mozilla nearly three times its previous yearly payment for the privilege of remaining Firefox's default search engine. And the new contract guarantees to give Mozilla revenue and Google search prominence for the better part of three years. At nearly $300 million a year, that works out to just under one billion for Mozilla.

So why the boost in payment?

According to Swisher, both Yahoo and Microsoft were allegedly a part of the conversation at varying points in the contract process. And it's been speculated that Google's willingness to play ball at a higher price point was something that neither of its competitors were willing to do.

If so, Google strong-armed the competition, and for good reason: The company wants to keep Microsoft's Bing from gaining any additional traction in the search market beyond its current deal with Yahoo. As for Yahoo ? given that its deal with Microsoft has Bing powering Yahoo Search in total ?it's anyone's guess as to why the company was separately bidding to become Firefox's primary search engine.

However, there's also speculation that Google's interest in Firefox wasn't primarily competitive. Rather, it's been suggested that the company's laying the groundwork for a potential defense against potential antitrust issues going forward.

Consider this: If Google's Chrome OS takes off, the company will invariably push Google Chrome as the de facto browser for users of the operating system. And when that happens, argues MG Siegler, Google and Chrome starts to look a lot like Microsoft and Internet Explorer. The antitrust vultures then start circling.

"But if Google can point to a billion dollar commitment in (basically fully) supporting Mozilla and Firefox, perhaps it will negate the Chrome problem. We'll see," Siegler writes.

"One thing is certain: Google is not paying Mozilla a billion dollars out of the kindness of their hearts. Doing so would be irresponsible to their shareholders. Again, they're paying all that money to a competitor. And they're doing it at terms far beyond the previous terms and at a rate that not even their biggest competitor would match."

And Mozilla's Firefox, which feels at times like a knight or a rook in a larger game, gets to keep cruising along at third-place in the global browser wars.

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Source: http://feeds.ziffdavis.com/~r/ziffdavis/pcmag/breakingnews/~3/rZKjTAp9FJI/0,2817,2398046,00.asp

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