The value of Google’s Firefox browser deal

December 20, 2011

Google has thrown the creators of the Firefox Web browser a lifeline.

On Tuesday, Firefox-maker Mozilla announced that it had renewed a “mutually beneficial revenue agreement” with Google for at least three more years.

The deal basically means that Google remains the default search engine built-in to the Firefox Web browser, a privilege for which Google pays Mozilla an unspecified fee.

Since Google signed the original deal in 2004, the search giant has introduced its own Web browser, dubbed Google Chrome. And with Chrome now used by one in four Web surfers, speculation had grown that Google might not renew the Firefox licensing deal, depriving the non-profit Mozilla of a vital revenue source (according to AllThingsD, which broke the news of Tuesday’s deal renewal, Google contributed 84 percent of Mozilla’s $123 million in 2010 revenue).

The value of the current Google deal with Mozilla is not being disclosed. Whatever the amount is though, it’s safe to say that it represents pocket change to Google, which has $43 billion in cash and short term securities on its balance sheet.

And with Google facing antitrust scrutiny for a variety of business practices, spending a little money to keep a rival browser alive has important PR value.

True, Google doesn’t dominate the Web browser market the way it does the search market. But Chrome’s market share is growing fast (in September 2009, it had a scant 2.8 percent share). And given the importance of the Web browser as the gateway to online information, Google’s newfound status as a browser superpower could provide ammunition to its critics going forward, especially if the browser market were to suddenly consist of only two major players, i.e. Google and Microsoft.

Of course, there’s no guarantee that Firefox would have disappeared had Google not renewed the deal – Microsoft might well have swooped in as Firefox’s new benefactor, becoming the default Firefox search provider in the process.

Still, in some ways Google’s Mozilla deal has echoes of a past move by another tech giant that once faced its own antitrust scrutiny: in 1997 Microsoft invested $150 million in Apple, a move that kept the then-struggling Mac maker alive to see another day and seemed designed to soften the criticisms about Microsoft’s PC market dominance.

A year later though, the U.S. government went on to sue Microsoft for antitrust violations.

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