Why Mozilla’s Yahoo deal fizzled out
Most of Mozilla’s revenue comes from search deals, but ComputerWorld’s 2017 report suggests that there could be a little more nuance to Mozilla’s decision to switch back to Google than Baker’s testimony may have covered.
According to ComputerWorld, Mozilla’s profits hit a record $520 million in 2016 while Yahoo was set as Firefox’s default search engine. But while Mozilla was undoubtedly profiting through that deal and others, the company was disappointed that it was receiving roughly 2 percent less revenue from search deals than it had projected earning that year.
One way to ramp up revenue, it seemed, was to nullify the Yahoo deal, which could happen if Yahoo was acquired. So when Verizon bought Yahoo in 2017 and Mozilla had a chance to wriggle out of its default agreement, Mozilla promptly backed out, switching back to Google that same year and then renewing Google’s default deal in 2020.
And backing out of that Yahoo deal also came with a bonus. Terms of that deal required that if it were nullified, Verizon had to pay either “the full length of the contract, or alternately, just the difference between Yahoo’s $375 million and whatever Mozilla got out of a new partner,” ComputerWorld reported.
In the end, there was an undisclosed settlement between Verizon and Mozilla, but ComputerWorld later reported that financial records showed a $338 million payment from Verizon in 2019. On top of revenue-sharing with Google, that payment drove up Mozilla’s revenue, which in 2019 reflected “an 84 percent year-over-year increase” that was “easily the most the open source developer has booked in a single year, beating the existing record by more than a quarter of billion dollars,” ComputerWorld reported.
Perhaps that bonus payment made switching back to Google even more attractive at a time when Baker told the court she “felt strongly that Yahoo was not delivering the search experience we needed and had contracted for.”