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Google Will Pay Mozilla Almost $300M Per Year in Search Deal

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Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#31

Post by shoota »

zobzu wrote: post #22
davidu wrote: post #17

Earlier quoted context omitted.

This is very wrong. Google cares deeply if Chrome wins. You are being way too narrow in your focus. Advertising is not their product, it's their revenue stream. Their product is _everything_ that sits between a user and monetizing an ad. Just look at what they have done from an engineering, offensive and defensive position here. It's all about that ethereal space between users and monetization. That's the battlefield…

True, but also, if Chrome wins, it means they don't have to care about these deals too much anymore. Because right now is Firefox switches search engine, it's very bad for Google. Chrome will never switch. So, yeah. That and that they can use Chrome to lock people into Google services in the future.

Actually, Chrome gives the user a choice of search engine on first startup and does not have a default browser ( at least in the United States)

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#32

Post by mehwoot »

redthrowaway wrote: post #5
scarmig wrote: post #2

What's actually being paid for, here? It could be the case that having Google as the default in Firefox will pay for itself through advertising. Anyone have any feel for how likely that is? If it isn't, is it an attempt to buy good will? Trying to gain some leverage over Mozilla when it comes to taking sides in the standards war? Or just the idea that any time Firefox gains a user is a time that Safari or IE isn't ga…

>Anyone have any feel for how likely that is? As a rough napkin calculation, Firefox has 25% of the market share. So, roughly, 25% of Google's revenue comes from FF users. That's ~ $7.5BB annually. Now, as to how many of those users would manually choose to use Google for search, I don't think anyone can say for sure (although I'm sure Google has made a good estimate). Suffice to say, Google clearly sees it as worth…

Woah, big leaps here. First, just because firefox has 25% of the browser market share most certainly does not mean that they provide 25% of google searches! What about all the searches through google's homepage, mobile, custom site search, etc, etc. A lot of people still use the homepage (I know, not very many amongst the tech savvy).

Secondly, whilst most of google's income is advertising, not all of it is income from advertising on their main search results page- doubleclick, adwords, etc, etc. Lots more stuff there.

I would place it for a rough guess AT MOST 10% of google's income comes from firefox.

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#33

Post by mehwoot »

bugsbunnyak wrote: post #18

Kind of curious: what is mozilla spending (or plan to) all of this cash on? Wikipedia says the MozCo has ~600 employees. Even if they are paying average $200k per person and spending another 80 million on rent, hosting, equipment, etc. that still leaves ~$100mil. Executive compensation? Rainy day fund?

Cocaine.

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#34

Post by tikhonj »

dchest wrote: post #29
zobzu wrote: post #24

Earlier quoted context omitted.

Mozilla is not your traditional corporation. Money always comes second. Openess and such values always come first. Always. There is no share holder. No one has to be worried, except people who support Mozilla's point of view. That's why it's a company worth supporting. If you support it, you win. If you don't, well, they might eventually die, and there aren't really many (read: any) replacement. It's pretty atypical.

I like Mozilla, but I think you're stretching "openness" here. I don't see a lot of openness in this: https://bugzilla.mozilla.org/show_bug.cgi?id=471561 Per the new business arrangement between Mozilla & Yandex in Russia, we need to make some changes to the ru build's search defaults. ... This bug is marked confidential until the agreement has been announced publicly. Openness would mean asking Russian users to vote…

No, openness means you can take the Firefox source and release your own (rebranded) browser with a different search engine. This is exactly what Iceweasel is; in fact, I think they even use DuckDuckGo for searching, but I could be wrong because I don't have it installed.

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#35

Post by nl »

jackowayed wrote: post #23
nl wrote: post #16

Earlier quoted context omitted.

It could be the case that having Google as the default in Firefox will pay for itself through advertising. Of course it will, easily (Seriously - people should understand that Google's business is search (and advertising), and they want to commoditize its complements - browsers and phones with browsers on them). Google does roughly 1 billion searches a day[1], and makes conservatively $0.08 per search[2]. Firefox has…

That estimate seems pretty far off. First, I think it's only fair to attribute ~1/2 of their revenue to search. You've got to give a lot to web ads, gmail ads, etc. Second, I'm not sure it's quite fair to give FF 25% of their total search. It may be 25% of their desktop search, but mobile search is getting bigger and bigger. I'd say 25% is at best an upper bound. Third, I think a large number of FF users would use Go…

That estimate seems pretty far off.

Well, it may well be 50% off, or even 80% off, but it does give you an order of magnitude. 100% correct numbers aren't really material: this is a really good deal for Google.

You are right that not all their revenue comes from search, and I should have thought of that. 66% of their revenue is from Google websites[1]. They don't break that down, but I'd suspect 90% is search (Youtube is probably a reasonable contributor but search ads are very expensive, and Google gets pretty good fill rates on them).

Mobile search is growing quickly, but they still "only" made $2.5 billion over the last 12 months from it (and also I presume this deal covers the Firefox mobile browser, which might not be popular now but Mozilla has been working hard on).

But yes, 25% market share is probably an upper bound.

I think a large number of FF users would use Google search even if that required changing the default.

It is possible that Mozilla could do a deal to change the search engine used on existing installs. I would hope they wouldn't do that, but it is something another search engine would probably have wanted to explore.

Also, about:home is the default home page on Firefox, and currently defaults to a Mozilla branded Google search page. That could be changed on existing browsers for sure.

All up, I agree that the $7.2 billion number is probably high, but it seems likely it would be more than $1-2 billion.

[1] http://investor.google.com/documents/20100331_google_10Q.htm...

[2] http://searchengineland.com/will-google-see-6-25-billion-in-...

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#36

Post by nl »

mehwoot wrote: post #32
redthrowaway wrote: post #5

Earlier quoted context omitted.

>Anyone have any feel for how likely that is? As a rough napkin calculation, Firefox has 25% of the market share. So, roughly, 25% of Google's revenue comes from FF users. That's ~ $7.5BB annually. Now, as to how many of those users would manually choose to use Google for search, I don't think anyone can say for sure (although I'm sure Google has made a good estimate). Suffice to say, Google clearly sees it as worth…

Woah, big leaps here. First, just because firefox has 25% of the browser market share most certainly does not mean that they provide 25% of google searches! What about all the searches through google's homepage, mobile, custom site search, etc, etc. A lot of people still use the homepage (I know, not very many amongst the tech savvy). Secondly, whilst most of google's income is advertising, not all of it is income fr…

A lot of people still use the homepage

The default Firefox home page (about:home) is a branded Google search. Combine that and the Firefox search box and I would bet you cover 90% of the searches Firefox users do.

Anyway, even if it is 10% it doesn't change the outcome substantially - it drops the revenue to $3-4 billion instead of over $7 billion. Either way it is worth paying $300 million for.

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#37

Post by nl »

zobzu wrote: post #25
nl wrote: post #14

Earlier quoted context omitted.

Not really. If Google or Bing hadn't paid enough then it would be pretty easy[1] to raise the money from random investors. There are precedents for that - Lycos (I think? or Infoseek?) raised capital after buying a default slot on the original Netscape browser with money they didn't actually have. [1] Not saying that building a web scale search engine is easy, exactly, but I am saying that the default search engine f…

Investors don't invest if there are no shares to get. And, there are no shares to get. And that's the whole point of Mozilla's existence. Thus, there's only such deals and donations. An investor would therefore need to donate, to support Mozilla.

1) Create a company

2) Bid $300 million for Mozilla's search spot.

3) Raise $600 million, build search engine

4) Profit

(Yeah, in practice steps 2 and 3 would need to happen simultaneously)

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#38

Post by johno215 »

jackowayed wrote: post #23
nl wrote: post #16

Earlier quoted context omitted.

It could be the case that having Google as the default in Firefox will pay for itself through advertising. Of course it will, easily (Seriously - people should understand that Google's business is search (and advertising), and they want to commoditize its complements - browsers and phones with browsers on them). Google does roughly 1 billion searches a day[1], and makes conservatively $0.08 per search[2]. Firefox has…

That estimate seems pretty far off. First, I think it's only fair to attribute ~1/2 of their revenue to search. You've got to give a lot to web ads, gmail ads, etc. Second, I'm not sure it's quite fair to give FF 25% of their total search. It may be 25% of their desktop search, but mobile search is getting bigger and bigger. I'd say 25% is at best an upper bound. Third, I think a large number of FF users would use Go…

The trick is figuring out how many users would use the Firefox search box vs would just enter google.com into the URL the old fashioned way (or would change the search box back to Google). I have no doubt Google is measuring that number and used it to guide their bidding.

My hunch is that Google is only breaking close to even with this deal (i.e. making $300M for paying $300M) and bid high just to keep too many people from trying Bing.

Plus, Google tends to act at least a little altruistic when it comes to the web [1] and may mind less being generous to Firefox.

[1] http://wikimediafoundation.org/wiki/Press_releases/Wikimedia...

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#39

Post by ianb »

bugsbunnyak wrote: post #18

Kind of curious: what is mozilla spending (or plan to) all of this cash on? Wikipedia says the MozCo has ~600 employees. Even if they are paying average $200k per person and spending another 80 million on rent, hosting, equipment, etc. that still leaves ~$100mil. Executive compensation? Rainy day fund?

Mozilla has been hiring quickly, and still puts some money in the bank. Most money is spent on employees.

Re: Google Will Pay Mozilla Almost $300M Per Year in Search Deal

#40

Post by dchest »

tikhonj wrote: post #34
dchest wrote: post #29

Earlier quoted context omitted.

I like Mozilla, but I think you're stretching "openness" here. I don't see a lot of openness in this: https://bugzilla.mozilla.org/show_bug.cgi?id=471561 Per the new business arrangement between Mozilla & Yandex in Russia, we need to make some changes to the ru build's search defaults. ... This bug is marked confidential until the agreement has been announced publicly. Openness would mean asking Russian users to vote…

No, openness means you can take the Firefox source and release your own (rebranded) browser with a different search engine. This is exactly what Iceweasel is; in fact, I think they even use DuckDuckGo for searching, but I could be wrong because I don't have it installed.

We are talking about different opennesses here. I'm not arguing that their browser is not open source. This thread is about bidding for the default search engine in Firefox and Mozilla's business decisions. Obviously, Yandex outbid Google in the Russian market. The switch from Google was based on money. The decision was not made in the open. I interpret this as "we value openness, but to keep this organization afloat to continue making open source browser we need to make _closed_ deals with search engines", which looks like an acceptable compromise to me. But it's nowhere near the complete openness as I understand it. If your goal is pure philanthropic -- to make the best free browser -- you base your decisions ONLY on what's best for users, not on an acceptable compromise somewhere inbetween [who gets you the most money] and [what's best for users].

PS I don't suggest that Yandex is not the best choice for Russian users (it may be), but we'll never know, because nobody asked them.

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