Google search deal produces 91% of Mozilla revenue

Mozilla's revenues were up 13 per cent in 2007 over the year before, as the organisation continued to profit from its partnership with search giant Google, the company said.


Mozilla's revenues were up 13 per cent in 2007 over the year before, as the organisation continued to profit from its partnership with search giant Google, the company said.

"Our revenue remains strong; our expenses focused," said Mitchell Baker, current chairman and former chief executive at Mozilla, in a post to her blog.

According to Mozilla's financial statement, the company's revenues for 2007 totalled $75.1 million (£50.6 million), a 13 percent leap on 2006's $66.8 million, with the bulk of the year's income coming from Mozilla's search deal with Google.

Search royalty payments accounted for $68.2 million (£46.0 million), or 91 per cent of 2007's revenues, said Mozilla's financial statement; that percentage was down slightly from the 92 per cent of 2006's income attributed to search.

The agreement between Mozilla and Google pays the former for assigning the latter as the default search engine in Firefox , and for click-throughs on ads placed on the ensuing search results pages. Mozilla renewed the deal with Google in August, and signed a three-year contract that ends in November 2011. At the time, the agreement was set to expire this month.

Baker noted, however, that the growth in the revenues it received from Google failed to keep pace with the increase in Firefox's userbase. "[Although] the Firefox userbase and search revenue have both increased from 2006 ... search revenue increased at a lesser rate than Firefox usage growth as the rate of payment declines with volume," Baker said.

During the same period, the number of people using Firefox on a daily basis nearly doubled, Baker maintained, growing from 27.9 million in 2006 to 48.9 million in 2007.

The financial statement also showed that Mozilla's expenses ballooned in 2007, climbing 68 per cent to $33.3 million from 2006's 19.8 million. Most of that increase was pegged to new spending on software development, which increased 75 per cent, to $20.7 million in 2007 from $11.8 million in 2006.

"Expenditures remain highly focused in two key areas: people and infrastructure," said Baker. "By the end of 2007, Mozilla was funding approximately 150 people working full or part-time on Mozilla around the world." The biggest concentrations of paid employees are in the US, Canada and Europe, although it has smaller outposts in China, Japan, New Zealand and South America.

The statement also revealed that the Mozilla Foundation and Mozilla Corp are being audited by the Internal Revenue Service (IRS) in the U.S. The agency, said Mozilla, is "challenging certain deductions."

Baker provided some additional information on the IRS investigation. "In 2005, the Mozilla Foundation established a 'tax reserve fund' for a portion of the revenue the Foundation received that year from Google," she said. "We did this in case the IRS decided to review the tax status of these funds.

This turns out to have been beneficial, as the IRS has decided to review this issue and the Mozilla Foundation. We are early in the process and do not yet have a good feel for how long this will take or the overall scope of what will be involved."

When she was still chief executive at Mozilla, Baker was adamant that the company could do without Google's money if a tussle over Mozilla's independence strained the relationship.

Since then, Google launched its own browser, Chrome, a fact that Baker mentioned only in passing - and in connection with new browsers released or under development by others, including Apple and Microsoft.

Firefox accounted for nearly 20 per cent of all browsers used during October, according to data collected by Web metrics firm Net Applications.

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