Why Google Is Really Paying Mozilla $300 Million

Mozilla Firefox 7

There has been a lot of press recently about Google‘s $300 million per year renewal of their deal with Mozilla, the makers of the Firefox browser amongst other open source software. Google may try and keep to its “do no evil” company line, but it is a business and it would not offer its competition nearly a billion dollars over three years out of the goodness of its heart – this deal made sense for both parties pure and simple.

The deal is over Google being the default search provider for the Firefox browser rather than Bing, Yahoo, Ask, or any other search provider. Whilst Microsoft has been able to rely on its own Internet Explorer browser for proving its online properties with traffic, IE’s market share has been sliding for years with Firefox and Chrome now have nearly a third of the market each and Microsoft’s Bing wants a bit of that action. Chrome is developed by the open source community and Google itself – so that marketshare is not up for grabs, and all of this results in a very competitive fight for Firefox’s users – a fight that is apparently worth $300 million per year.

Google engineer Peter Kasting insists that the deal was done to keep improving the web at a rapid pace because a better web is better for Google as people spend more time online using Google’s services – but this is a side benefit. The emergence of Chrome has certainly pushed web development forward and forced Firefox and IE to up their game, and all this progress has helped grow the userbase of Google’s services – but that is not the main reason Google developed Chrome. No, Chrome was built to give Google a bigger say in how the web progressed – and with a near 30% marketshare they certainly now have that influence. The quicker HTML5 gets adopted, the quicker Google can improve its web services and the more Chrome the browser is more important than the OS beneath it – whether that is Windows, iOS, Android, or anything else. If Chrome was build to give Google more influence on how web technologies progressed, funding a competitor in Firefox does not align with that plan – it does, however, make business sense for the search deal and resultant user acquisition. Google promotes Chrome on its homepage to Firefox users remember.

Neither is the deal much to do with Google attempting to avoid anti-trust/competition law investigations in the future – much in the same way Microsoft invested in Apple back when it was struggling a decade ago. This is certainly a great upside for the company, but Microsoft already has some rather sizeable competitors in the form of Microsoft (IE) and Apple (Safari) to contend with. Having a third major competitor certainly doesn’t hurt thing in that perspective – but such tactics are not foolproof and $1 billion seems a lot to invest in such a scheme.

It may be interesting for bloggers and technology journalists to posit various theories as to why Google may be offering such a sweetened deal to one of its major competitors, the fact is that the deal just made sense for both companies involved making a bargain in both of their interests and Google paying the market price in a bidding war as stated by Mozilla veteran Asa Dotzler.

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