Firefox loses its sugar daddy

Google’s shock entry into the browser market might be bad news for Microsoft’s Internet Explorer, but it could be terminal for Mozilla and Firefox.

Google is Mozilla’s sugar daddy. In 2006 (the latest figures we have available), a staggering 85% of Mozilla Corp’s revenue came from the homepage and search deal it has with Google. Firefox is almost entirely dependent on the company that’s just launched what could easily become its biggest rival.

Mozilla might therefore be thanking its lucky stars that just last week Google signed a three-year extension to that Firefox search deal. But why, knowing full well that it was about to launch a competitor, did Google decide to continue propping up Mozilla?

Aside from the fact that cutting ties with Firefox would have instantly wiped hundreds of millions of hits from Google’s search, Mozilla is now Google’s insurance policy. If Chrome fails, Google can maintain its tight-knit relationship with Firefox. If Chrome succeeds, Google can pull the plug on its Mozilla deal.

Which gives Mozilla three years to find a new benefactor. But which other search company would be prepared to pump money into Firefox? Microsoft’s about as likely to bankroll a rival as George Bush is to host an open-top parade through the streets of Baghdad. Yahoo, meanwhile, is now so closely aligned to Google that it’s practically unthinkable that it will step into the breach. Which leaves the minnows such as Ask, who certainly won’t be stumping up the tens of millions Google deposits in the Mozilla vaults every year.

Mozilla either needs to find a new way to make money. Or start cutting its cloth to suit a much tighter budget.