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Google to pay Mozilla $300 mn yearly in new search deal: report

Google promised to pay Mozilla almost $300 million annually to keep its search engine as the default in Firefox, according to a report today on AllThingsD, a blog operated by the publisher of the Wall Street Journal.

Google and Mozilla jointly announced today that they had struck a new deal to keep Google as Firefox’s default search engine, and on the browser’s home page.

At the time, Mozilla said only that it had “negotiated a significant and mutually beneficial revenue agreement with Google” which would last at least three years.

Mozilla and Google both declined to provide additional information about the new pact, citing confidentiality requirements.

Today, Kara Swisher, the co-executive editor of AllThingsD, said unnamed sources told her that under the agreement, Google will pay slightly less than $300 million per year to Mozilla .

Swisher also said that the price had been pushed upward by bidding from both Microsoft, which operates the Bing search site, and Yahoo.

According to metrics company comScore, Bing and Yahoo were tied in November for second place, each with a 15% share of the search market. Google controlled a still-dominant 65% share.

If Swisher’s sources are on target, the $300 million would be nearly triple what Google paid out to Mozilla in 2010, the last year for which the latter has released financial information.

In 2010, Google’s payment accounted for 84% of Mozilla’s total revenues, or approximately $103 million. In 2009, Google forked over about $89 million, or 86% of Mozilla’s income, to have Firefox’s default search spot.

Total payments to Mozilla by Google during the years 2008-2010 were about $260 million, or $40 million less than the open-source maker of Firefox would receive in one year under the alleged new deal.

Mozilla and Google today declined to comment on the AllThingsD report or to discuss specifics of the new contract.

But one analyst believed that the $300 million figure was feasible.

“Yes, $300 million is a big sum, but it does highlight what is at stake,” said Al Hilwa, an analyst with IDC, referring to search. “The sum shows that there is competition which Mozilla no doubt was able to harness in this deal.”

There was at least one sign that Mozilla may have been playing Microsoft and Google against each other, analysts said . In October, Mozilla launched a customised edition of Firefox, dubbed “Firefox with Bing,” that puts Bing search in the default search position.

If Bing had swung a deal with Mozilla it would have been a coup for Microsoft’s still-struggling search engine. But it would also have been in line with Microsoft’s expressed plan to put Bing on the map.

During a meeting with financial analysts last September, Qi Lu, the president of the company’s online services division, said that Microsoft could not simply “out-Google but we must change the game, change the game fundamentally.”

Lu pegged of strategic partnerships as one of three key factors in doing just that, noting that the more partners Microsoft acquired, the more data it would have at its disposal to radically improve the quality of search.

And take on Google.

“We have the strategic partnerships, Yahoo, Nokia, and Facebook, in particular, because with Facebook and Bing we have two organisations that are deeply motivated to innovate, particularly innovate in a way to disrupt the incumbent,” Lu said, not naming but obviously talking about Google. Like the three partners Lu listed, Mozilla is a rival of Google, and so would have fit within Microsoft’s framework of working with Google’s foes.

But if Microsoft did try to close a deal with Mozilla, it failed. And Mozilla benefitted.

“[This shows] the importance of the browser as a category,” IDC’s Hilwa said. “Browsers are free but extrapolating from this deal we have a $1 billion market based on monetisation through the browser search bar alone.”

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