Pay To Stay
I've been thinking more about Google's renewal of their search deal with Mozilla for Firefox. It's fascinating on a few different levels. Most notably: Google is committing close to a billion dollars to bankroll a browser which is a rival to their own browser. — Why?
Context & Ripple Effects
Mozilla put the renewal on the record on December 20, and AllThingsD followed two days later with the number: nearly $300M per year from Google, a bid that beat both Microsoft and Yahoo for the Firefox default slot. At roughly a billion dollars over the term, it is the largest single line funding one of the web's few independent browsers.
First-order effects
- Mozilla's budget is secured for the next term: with search royalties making up the overwhelming majority of its income per the August 2011 economics breakdown, losing Google would have forced layoffs, a Bing switch, or both — instead the organization gets continuity at a higher price.
- Microsoft and Yahoo lose the auction outright: their bids to convert Firefox's default search box into Bing or Yahoo traffic failed, leaving them to buy distribution elsewhere.
Second-order effects
- Firefox stays independent and non-Chromium, preserving a second major engine and keeping pressure on Google to keep Chrome competitive on merit rather than by default alone.
- The price signal resets the market for defaults: if Google will pay ~$300M a year for one browser's search box, every other distribution point — carriers, OEMs, other browsers — becomes more expensive for Microsoft and Yahoo to acquire.
Third-order effects
- Search defaults harden into an auctioned asset: the company that can afford to pay rents the front door to the web, entrenching gatekeeper leverage where traffic access is priced rather than earned.
- Independent browsers survive only as subsidized properties of the search giants they nominally compete with — a structural dependency that critics like CNET have argued since 2007 leaves no truly neutral client for the open web.
The trend: Web entry points are shifting from products companies build to assets they rent, with search incumbents paying rivals nine-figure sums to control the default.