Mozilla Contemplates a Future Without Google

Mozilla Chair Mitchell Baker says the Chrome browser is making the foundation behind Firefox rethink its reliance on revenues from Google

By Douglas MacMillan

"We have been offered a blank check to replace Google," says Mozilla's Mitchell Baker

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From the head offices for Mozilla in Mountain View, Calif., executives can see Google (GOOG) in several directions. The search giant's sprawling Googleplex buildings dominate the landscape. "We are physically surrounded by Google," says Mitchell Baker, who became chair of the Mozilla Foundation after stepping down from its chief executive post last year.

Google also shows up all over the balance sheet of Mozilla, creator of the Firefox browser and other software. Under an agreement between the two, Google's search engine enjoys a default position on the toolbar of Firefox, the second-most-used Web browser after Microsoft's (MSFT) Internet Explorer.

To date, the arrangement has proved mutually beneficial. Google accounts for more than 88% of Mozilla's revenue, which totaled $75 million in 2007. And as Mozilla wins over users of Internet Explorer, it helps Google grab share in the lucrative Web search market. Firefox has about 22% of the browser market, making it by far the strongest competitor to Internet Explorer, which maintains a 67% share, according to Net Applications.

"Firefox Needs Google More"

How much longer this pairing can last has been called into question since September, when Google introduced its own Web browser, Chrome. The prospect that Google may not re-up the three-year contract set to expire in 2011 has Mozilla considering other search partnerships and ways to generate revenue, Baker said during a recent visit to BusinessWeek's offices in New York. "They could breach the contract or they could decide not to renew," Baker says. While she says she doesn't expect Google to take either approach, she's nonetheless considering alternatives.

Smart move, analysts say. "Firefox needs Google more than Google needs Firefox, and that situation will only become more pronounced" as Chrome gains new users, says Ray Valdes, research director at Gartner (IT).

The simplest alternative would be for Mozilla to sell Firefox's default search space to someone else. "There are probably other search engines that would pay us more money," Baker says. Yahoo! (YHOO) and Microsoft's MSN, Google's two main search rivals, come to mind, but Baker says smaller search engines wouldn't be discounted should such a situation arise. Firefox's valuable real estate would likely fetch a premium from any contender seeking a quick way to gain ground on Google. One player Baker won't identify "offered a blank check to replace Google," she says. She notes it wasn't Microsoft.

Monetizing the Browser

Losing Google would carry risks. "It's possible that Firefox's adoption rate could decline if Firefox users felt they were getting Microsoft or Yahoo shoved down their throat," says John Battelle, an Internet entrepreneur, author, and operator of John Battelle's Searchblog.

Baker says Mozilla will always give its users their choice of search engines. Today, Google is the default search box for Firefox, but the browser lets users change the default to any of dozens of alternative search engines. Ultimately, it may not make sense to have another company pay for the default search box if Mozilla users decide to switch back to Google. "If people want to use Google, they want to use Google," says Baker.