Firefox developer, Mozilla, has announced a fresh wave of job losses, with the browser firm blaming its financial problems on Coronavirus. However, the company is facing a much bigger financial iceberg on the horizon: the potential end of its critical search deal with Google.
Mozilla Corporation yesterday announced 250 job losses across the company, with CEO Mitchell Baker claiming in an memo to staff that “COVID-19 has accelerated the need and magnified the depth for these changes”.
However, Mozilla could face even bigger financial problems in only a few months’ time if it fails to renew its lucrative search deal with Google.
Mozilla announced in November 2017 that Google had returned to become the default search engine for Firefox in the U.S. and other worldwide territories. That was a three-year deal which is set to expire this autumn. Failure to secure a new search deal with its biggest rival could, by Mozilla’s own admission, have an enormous effect on Mozilla Corporation’s finances.
Mozilla’s latest annual report states that “the majority of Mozilla Corporation revenue is generated from global browser search partnerships, including the deal negotiated with Google in 2017.”
However, Mozilla is now in a much weaker negotiating position than it was when that last deal was struck three years ago.
Firefox’s declining market share
When the last deal was struck in November 2017, Firefox had 11.4% of the desktop browser market, according to figures from NetMarketShare. Now, that market share has dipped considerably to only 7.8%, with Firefox looking likely to be overtaken by Microsoft’s resurgent Edge browser before the end of the year, losing its place as the second most used browser on the desktop. Google is miles out in front with a 68.8% share.
In the much more important mobile market, Firefox is an irrelevance. Its market share of 0.7% (again from NetMarketShare) leaves it dawdling in seventh place, miles behind runaway leaders Chrome and Safari. Firefox’s negotiating hand is not strong.
If Google decided it didn’t need the ever-decreasing search traffic coming from Firefox, would Mozilla be able to strike a search deal with any of Google’s rivals?
Before Google returned as the default search engine in 2017, Mozilla had a deal with Yahoo. However, as Mozilla’s annual report notes, the termination of that deal “was the subject of litigation the parties resolved in 2019”. It seems unlikely Yahoo would be queuing up to retake its place.
The only other search engine with significant financial resources is Microsoft’s Bing, but would it really be in Microsoft’s best interests to prop up its closest rival on the desktop? That again seems improbable.
That leaves Mozilla either hoping that Google will renew its search deal or finding another means to plug the huge financial gap the deal ending would create. Mozilla has launched paid-for services this year, including the $4.99-per-month Mozilla VPN.
In a statement issued yesterday, Baker said she was looking for more such revenue generators. “Recognizing that the old model where everything was free has consequences, means we must explore a range of different business opportunities and alternate value exchanges,” she wrote.
“How can we, or others who want a better internet, or those who feel like a different balance should exist between social and public benefit and private profit offer an alternative? We need to identify those people and join them. We must learn and expand different ways to support ourselves and build a business that isn’t what we see today.”
Mozilla declined to comment when asked whether there was any prospect of Google renewing its search deal and whether a potential cessation of the deal was factored into yesterday’s announcement. The next few months could be very tense indeed.