Mozilla sees 'collateral damage' in DOJ antitrust fight with Google

[Karlston]

Mozilla sees 'collateral damage' in DOJ antitrust fight with Google

In a carefully worded statement after the Justice Department announced antitrust action against Google, the Firefox browser maker implied it might suffer financially in the fight.

Magdalena Petrova/IDG

 

Mozilla, maker of Firefox, this week issued a carefully-worded statement that implied it might be harmed by "collateral damage" if the U.S. Department of Justice (DOJ) wins its recently-revealed antitrust lawsuit against search giant Google.

 

"The ultimate outcomes of an antitrust lawsuit should not cause collateral damage to the very organizations — like Mozilla — best positioned to drive competition and protect the interests of consumers on the web," Amy Keating, the Mozilla general counsel, wrote in an Oct. 20 post to a company blog.

 

Although Keating did not come out and say as much, she was talking about the possibility, that if Google loses the case it might not be allowed to pay rival browser developers, including Mozilla, fees for setting Google's search engine as those browsers' default.

 

"In this new lawsuit, the DOJ referenced Google's search agreement with Mozilla as one example of Google's monopolization of the search engine market in the United States," Keating said, then left it to readers to make the connection between that policy and her contention that Mozilla might suffer damage. "Unintended harm to smaller innovators from enforcement actions will be detrimental to the system as a whole, without any meaningful benefit to consumers — and is not how anyone will fix Big Tech."

Mozilla's search deals are Firefox's oxygen

On Tuesday, the DOJ filed a lawsuit accusing Google of using illegal practices to bolster its search and search advertising businesses. According to the lawsuit — which was joined by the Attorneys General of 11 U.S. states — among those practices was Google's revenue-sharing deals with a host of companies, including device makers like Apple and Google, mobile carriers such as Verizon and AT&T, and browser makers, like Mozilla and Opera Software.

 

In those deals, Google pays out a portion of its search advertising revenue in exchange for those companies setting the Google search engine as the default on devices and in browsers.

 

That's where Mozilla comes in.

 

Mozilla lives on search engine revenue. It always has. In 2018, the last year for which Mozilla has made data public, 91% of Mozilla's total revenue came from search deals. The most important of those was with Google, which in 2017 again became the Firefox default in the U.S., Canada, Taiwan and Hong Kong.

 

According to its 2018 financial report, Mozilla's revenue fell 20% from the year prior, the first decline in the 14 years Computerworld had tracked the organization's financials. Although Mozilla asserted that the drop-off would not affect its work, only weeks later it laid off 70 employees. And then in August, Mozilla shed another 250 workers, about 25% of its total.

 

The disappearance of Google's money, whether mandated by a court or proposed as part of a Google-initiated settlement with the DOJ, would be a nightmare for Mozilla, if not a disaster. Mozilla had a deal with Yahoo between 2015 and 2017, but Mozilla nullified the remaining years on the contract after Yahoo was sold; that may have torched any remaining bridges to Yahoo. Microsoft's Bing may be willing to work with Mozilla to boost its search share, assuming Microsoft would be willing to pay to keep a close rival — Firefox's browser share is within a percentage point and a half of Edge's — alive.

 

At the end of 2018, Mozilla had $482 million in cash, cash equivalents and investments, enough to run operations at that year's level for around 12 months. (If Mozilla keeps to prior practice it will release 2019's financials in early December.) But the company has little else to rely on: almost every attempt to diversify revenue, whether advertising, a mobile operating system or various services, has failed, been shuttered or has raised little revenue.

 

Without a search deal, Mozilla would be in dire straits.

 

While Google's reasons for doing its default-search deals may vary, regulators argued that it wasn't always to boost Google's own search share. Sometimes it was simply to lock a partner into a deal so that another search company couldn't use that, say, browser, to boost its position. "As a Google employee once noted, Google's browser agreements can be 'a good way to keep' (a browser) away from Bing,'" the complaint stated.

 

That may explain Google's continued support for Mozilla, even in the face of Firefox's long slide in market share.

 

In September, Firefox accounted for an estimated 7.2% of all browser activity. That was 1.5 points lower than a year earlier, 3 points below its share 18 months ago. Based on Firefox's 12-month average, the browser will slip below 6% in July 2021, with continued losses after that.

Don't shoot the browser maker

"For the past 20 years, Mozilla has been leading the fight for competition, innovation and consumer choice in the browser market and beyond," wrote Keating in Mozilla's statement. "We have a long track record of creating innovative products and services that respect the privacy and security of consumers, and have successfully pushed the market to follow suit."

 

That was the set-up, all leading up to the "Yes, but..." Mozilla wanted to play, which was the "unintended harm to smaller innovators from enforcement actions..." bit.

 

In other words, while it might make antitrust officials happy to stop Google from making default-search deals, the result would be akin to throwing the baby out with the bath water. Mozilla would be hurt, she implied. Firefox would suffer, she suggested. Or worse, vanish.

 

It was a bold move, but very much in keeping with Mozilla's long-term walk of the razor's edge that is the tension between Firefox and its finances.

 

Not only has Mozilla taken sustenance from its greatest browser competitor, but many of its priorities are in direct contrast to Google's, from which it draws that sustenance. Firefox, for instance, has been at the forefront of the effort to eliminate user tracking on the web, adding features that make it difficult or even impossible for advertisers to monitor consumers' browsing habits so that the ads people see are personalized. Yet Google is the world's leader in search advertising, the business that fuels everything.

 

Mozilla doesn't want to be Google; it wants to be the anti-Google. But it takes Google's money. Mozilla wants to put distance between it, and its Firefox, and Google and its Chrome. But when it comes to money, Google's fight is now Mozilla's fight, too.

 

It's unclear what the DOJ thinks of the argument that to save Mozilla, Google must be allowed to continue to make default-search pacts.

 

Of course, the question may never come up. The Microsoft antitrust action two decades ago, for instance, went on for years before a settlement was reached. During the time U.S. v Google runs its course, lots could happen. Mozilla could be pressed so hard financially that it folds. Firefox's share could dwindle to the point of utter insignificance. Or Google could sacrifice some of its default-search agreements in the hope of placating DOJ.

 

The deal with Mozilla might be a prime candidate, along with even smaller fry, like Opera and the boutique browsers that also default to Google.

 

It's not surprising that Mozilla jumped at the chance to set the debate about its link to Google's revenue sharing. This looks to be the most dangerous moment for Mozilla since Chrome debuted 12 years ago.

 

 

Mozilla sees 'collateral damage' in DOJ antitrust fight with Google