In Browser War, It's Really Google vs. IE

While Mozilla may get all the credit for finally dethroning Internet Explorer as the only dominant Web browser with its development of Firefox, the man behind the curtain continues to be Google, which provides the vast majority of the cash that keeps Mozilla going.

According to financial statements posted this week by Mozilla CEO Mitchell Baker, the company brought in $66.8 million in revenues during 2006 - a 26 percent improvement from 2005's revenues of $52.9 million. A full 85 percent of Mozilla's revenue for 2006 came directly from Google through its search box partnership.

Mozilla even cautions about this reliance on the search giant in a footnote; Google's deal with Mozilla expires in November 2008. But it's unlikely that much will change come next year, as Google benefits quite a bit for being Firefox's default search provider, in addition to seeing Microsoft's IE market share continue to drop.

Out of the nearly $67 million in revenue, Mozilla only had about $20 million in expenses, most of which went to paying the company's 90 full-time and part-time employees. Aside from Google, Mozilla says revenues came in through the company's store, along with public donations and interest on its investments.

Because it is spending far less than it is making, Baker says Mozilla has gone "beyond sustainability" and is now able to expand its hiring, and give grants that fund programs. $300,000 went to these efforts in 2006.

"This is a small first step as we learn to spend money without causing unintended consequences in our community. We expect the amounts to expand significantly in 2007 and beyond," Baker explained. "For example, so far in 2007 we provided a grant to the Open Source Lab at Oregon State University for its ongoing operations in support of open source projects and the Participatory Culture Foundation for improving open source-cross platform video on the Internet through its Miro Player project."

With a new datacenter open in Europe to serve 600,000 downloads per day and 120 million people using Firefox actively, Mozilla is establishing itself as a powerhouse on the Internet. "We've always had high mindshare but combining mindshare with a significant number of users makes an enormous difference. As a result, good things happen," Baker says.

But a big question remains: How long can Mozilla stay independent? With Google ostensibly bankrolling the company and Firefox becoming a driving force on the Web -- in both browsers and Web standards -- the search giant could see a prime opportunity to expand its own reach and better compete with Microsoft and Yahoo. With the search deal expiring next year, Google may also find itself in a bidding war to retain its stake in Mozilla.