Global Economics

Mozilla Takes on Microsoft in China

Internet Explorer has held a virtual monopoly on the mainland, home to 160 million Internet users. Now, Firefox is pushing for more market share

Like most Chinese Internet users, Chengdu native Gang Lu for years used Microsoft's (MSFT) Internet Explorer for his Web browsing. He switched to Firefox, the open-source browser, six years ago only after going to Britain for graduate school and finding most of his friends and colleagues using it. Today, Lu is the London director of business development at Netvibes Asia, which offers personalized home pages, and spends much of his time working with Chinese Web startups. He says he's frustrated because so few Chinese sites support Firefox. "I have visited quite a few Internet companies and talked to their developers. More than 95% of these guys say: 'We just need to make sure our Web site or our service can work on IE. I don't care about Firefox.'"

Now, Firefox fans are trying to boost the upstart browser's Chinese profile. Last month, Mozilla signed an agreement with China's most popular search engine, Baidu (BIDU), to cement an existing relationship that allows users of Firefox's Chinese edition to use Baidu's search engine. That was the latest in a series of China developments. In July the Mozilla Foundation, the open-source group that promotes Firefox, formally set up a presence in Beijing to spread the gospel of the open-source movement and convert as many Chinese Internet users to Firefox as it can.

Mozilla also hired Li Gong—formerly general manager of Microsoft's MSN operations in China—and named him chairman and chief executive officer of Mozilla Online, the nonprofit foundation's first legally owned entity outside the U.S. And it has opened an office in Beijing's Tsinghua Science Park, where Google (GOOG), Sun Microsystems (SUNW), and Chinese portal Sohu (SOHU) have offices.

160 Million Internet Users

One item at the top of the agenda to popularize Mozilla: Come up with a Chinese name. Because "Mozilla" is a made-up word that cannot be translated into Chinese, the Mozilla team named the Beijing subsidiary "mou zhi," meaning "seeking wisdom" in Mandarin. "Through promotion of Firefox, we want to promote a vision that the Internet should be open, people should have choice, people should be able to personalize their experience, not [let it be] dictated by one company," says Gong, who served as co-chair of Mozilla's foundation in China while he ran Sun's China operations in 2005.

Firefox still has a long way to go. With more than 160 million Internet users, China is the world's second-largest Net market and is likely to overtake the U.S. as No. 1 by the end of the decade. More than four-fifths of China's Internet users use IE to go online, mostly because it's bundled with the Windows operating system. Homegrown companies Maxthon—a private company based in Hong Kong—and Tencent —the Shenzhen-based operator of China's most popular instant messaging service—both have browsers based on IE kernels that are the second and third most commonly used in China.

Mozilla estimates there are 3.5 million regular Firefox users in China, giving it just 2% of the market. (According to June, 2007, figures by Onestat, Mozilla has a 19.65% market share in the U.S.) Mozilla has set a goal of grabbing a 5% market share in China "as quickly as possible," says Gong.

A Matter of Security

In the West, Mozilla has been able to eat away at IE's market share by promoting Firefox as a free open-source software project. In China, the open-source movement is having a harder time gaining traction because of widespread software piracy. With pirated copies of Windows XP or Vista selling on the street for less than $2, there is little economic incentive for Chinese Internet users to download Firefox.

Bill Xu, founder of the ZEUUX Free Software Community, a Beijing group that promotes open source, points out that for Firefox to succeed in China, it shouldn't compete on cost but by stressing its security features. "IE isn't very secure. It's plagued with a lot of add-ons, malware, and viruses. Firefox is more secure, and that's the main reason a lot of users choose it," he says.

In January, Xu, 29, started an open letter campaign against China Merchants Bank after discovering he couldn't do online banking using Firefox. Many Chinese banks do not have their own IT department, so they buy off-the-shelf online banking software, which uses Microsoft's proprietary ActiveX software module.

Most Prefer the Package

That means the bank's customers must use Microsoft's IE browser to bank online. Since Xu only has open-source software on his laptop, he had to borrow a friend's computer to bank online. He is wary of imposing on his friends too many times, so he has given up online banking and makes the trip to the branch instead. So far, more than 200 people have responded to his open letter campaign.

Firefox still has work to do in order to meet the needs of Chinese users. A supposed benefit of Firefox is that users can personalize their browsers by installing add-ons to perform a range of tasks from getting weather updates to checking Gmail (Google e-mail) accounts. But Gong and his team of six surveyed Firefox users in China and found most users preferred to download browsers with the add-ons pre-packaged instead of having the option to customize.

And while Firefox offers 4,000 add-ons, they are all in English. "A lot of people in China use the Internet to watch movies or listen to music. It would make things easier if Firefox included these add-ons instead of forcing the users to look for the add-ons on the Internet," says Shen Xiaodong, 24, a Web site designer helping a Beijing startup make sure its Web site is compatible with six different Web browsers. "Most people don't know where to look for these add-ons."

Taking the Message to Campus

Mozilla's China team has been reaching out with local partners to customize Firefox to their Chinese users' preferences. Besides Baidu, Mozilla is in talks with other Chinese Internet companies about partnerships. Gong declined to say how much Mozilla's deal with Baidu is worth, explaining it depends on the amount of traffic and the revenue Baidu makes from its search function in Mozilla Firefox.

Since Mozilla is essentially starting from scratch in China, it has decided to first focus its efforts on the base of core users to build more awareness. It has set up a campus ambassador program in four universities in Beijing, where student volunteers work to educate college students about Firefox. Mozilla is also reaching out to computer programmers and Web masters to encourage them to build Web sites to World Wide Web Consortium (W3C) standards instead of IE standards.

Such steps may seem elementary, but they are necessary in China, where most people don't know even know which Internet browser they use. Gong recalls visiting one software company that supplies Linux to Chinese government agencies and noticing an IE icon on the computer desktop. When he asked the programmer why they installed IE on Linux, they told him that it was actually Firefox. "Our users don't know what Firefox is, but they know this button is Internet," says Gong. "So they overlay the IE button on top of the Firefox icon."

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