The dynamics behind the deal are interesting. Google probably paid just enough to outbid Bing, the second highest bidder. Or Firefox played a great hand of poker with Google. In either case it should trouble Mozilla that they are dependent on not only Google, but Bing (by extension) for the majority of their revenue.
Finding a sustainable way to reduce reliance on these companies should be the #1 job of the Mozilla business team in the next 3 years, before the deal comes up for renewal.
I'm sure Mozilla feels very precarious getting such a huge chunk of money from a single source. But:
- Mozilla isn't a company, it's a non-profit (this deal was done by Mozilla Corp, yes, but that's a wholly owned branch of the foundation). Reducing their reliance on Google for cash is never going to be Mozilla's aim as a whole.
- Three years is a hell of a long time. When the last deal was negotiated, there was no Bing, and no Chrome. The world was a very different place. No matter how good their strategy is, it's going to be a terrible one for the world in 3 years time.
- The interests of the Mozilla foundation and Google are broadly aligned - they both care about an open, free web. That's a rare thing to find in large industry players these days.
Your right that for Google whether a user is using Chrome or using Firefox with Google Search it shouldn't matter much on the bottom line and they don't have to worry too much about feature support from Firefox as they are quick to propose/ adopt standards.
Even though I prefer Google's search results to Bing's, I feel the "open web" might be a better place if Mozilla unseated Google's search monopoly by signing with Bing. Mozilla does have a search deal with Microsoft, but it's for second place on the list. If Bing was Firefox's default search engine, Google would have some healthy search competition.
If Google or Bing hadn't paid enough then it would be pretty easy[1] to raise the money from random investors.
There are precedents for that - Lycos (I think? or Infoseek?) raised capital after buying a default slot on the original Netscape browser with money they didn't actually have.
[1] Not saying that building a web scale search engine is easy, exactly, but I am saying that the default search engine for ~25% of the world web browsers is a business a lot of investors would want to invest in.
It's a great option to consider, but:
* What matters is not just default placement, but actual share. How many would not switch to Google? Say hypothetically half which I think is generous.
* That leaves them with the kind of share that Bing had prior to the yahoo deal. And bing was losing over a billion a year.
* That still doesn't actually create a business model, because now they have create a search ad network to compete with AdWords. That's another tough problem - especially without scale.
So all in all I don't doubt they could raise some money, but chances of success would be extremely slim.
I don't think that Mozilla has a BATNA to Bing/Google which is why the economics are so different in each round. It's entirely based on Google and Bing bidding against each other.
I think nl was suggesting that investors could raise money to buy Firefox's search spot and then create a search engine. Imagine if some VC firm raised $301M to outbid Google and then signed a deal with DuckDuckGo.
If DuckDuckGo could really make $301+ M on search in Firefox, they would bid that. Reality, they can't. There is no value created in the imagined middle man investor.
There would be more if there was an easy way around the distribution problem. Becoming the default search engine in Firefox would sure help with that problem.
"""99% of FF users would just switch to Google as soon as they install it. I assume you can back that up somehow? Most evidence I've seen indicates that the majority of people don't change defaults.""""
Then the evidence you've seen is wrong. If people "don't change defaults" how come they switched to FF in the first place, which is not the default browser on Windows, but is (or rather, was until it lost to Chrome) an extremely popular windows browser?
Maybe naive users don't change defaults, but those users are sticking with (duh) the default IE. Users that moved to FF are more likely to change defaults.
Also, they won't even have to change the default: they just navigate to google.com and search from there, instead of using the search in the toolbar with this unfamiliar "Bing" thing.
Note the use of the word: "competent". None has results that good that make people actually want to switch to it. (For example, DDG's main selling point is privacy).
The only example I agree with, Baidu was made from a similar algorithm to Google's and with a remarkably similar history (RankDex vs PageRank etc). And even that is mainly popular in China for national/cultural/political reasons, methinks.
So is your argument that Google should have paid nothing to be the default search engine, because people will switch, or is it that $300 million is an appropriate about for the 1% that won't change the default?
"""So is your argument that Google should have paid nothing to be the default search engine, because people will switch, or is it that $300 million is an appropriate about for the 1% that won't change the default?"""
No, "my argument" was on the topic of the comment I specifically responded to.
You know, where you said that by getting the FF default search && making your own search engine, you'll "profit". To which I responded something akin to: "bollocks --even if you do that, FF users will just switch search engine back to Google".
Mozilla is not your traditional corporation.
Money always comes second. Openess and such values always come first. Always.
There is no share holder. No one has to be worried, except people who support Mozilla's point of view.
That's why it's a company worth supporting. If you support it, you win. If you don't, well, they might eventually die, and there aren't really many (read: any) replacement.
It's pretty atypical.
Per the new business arrangement between Mozilla & Yandex
in Russia, we need to make some changes to the ru build's
search defaults.
...
This bug is marked confidential until the agreement
has been announced publicly.
Openness would mean asking Russian users to vote for the default search engine before striking a deal.
No, openness means you can take the Firefox source and release your own (rebranded) browser with a different search engine. This is exactly what Iceweasel is; in fact, I think they even use DuckDuckGo for searching, but I could be wrong because I don't have it installed.
We are talking about different opennesses here. I'm not arguing that their browser is not open source. This thread is about bidding for the default search engine in Firefox and Mozilla's business decisions. Obviously, Yandex outbid Google in the Russian market. The switch from Google was based on money. The decision was not made in the open. I interpret this as "we value openness, but to keep this organization afloat to continue making open source browser we need to make _closed_ deals with search engines", which looks like an acceptable compromise to me. But it's nowhere near the complete openness as I understand it. If your goal is pure philanthropic -- to make the best free browser -- you base your decisions ONLY on what's best for users, not on an acceptable compromise somewhere inbetween [who gets you the most money] and [what's best for users].
PS I don't suggest that Yandex is not the best choice for Russian users (it may be), but we'll never know, because nobody asked them.
> Obviously, Yandex outbid Google in the Russian market. The switch from Google was based on money.
I find that very hard to believe. How can Yandex possibly outbid Google? Google's revenue is 60 times bigger. If Google wanted to win, it would have won.
Since Yandex was chosen, clearly there are other factors than money here. Perhaps Yandex is better for Russian users? I don't know, I don't speak Russian.
Actually I think it is looking more sustainable now that bing has high interest in the position as well. As long as Firefox holds a market share similar to its current one and bing holds its market share to keep ms interested in pushing it the decent sized deals should continue and probably grow.
What would to suggest as an alternate revenue source?
I don't think it is productive to blame "the players". In fact, it obscures the issue.
Look at it from the perspective of the patents (in a Dawkins sense). Patents want to make money. Patents grant exclusivity to something valuable. In a capitalist society they will naturally be acquired by whoever can make the most money. Maybe not initially but over time they will find the right (value maximizing) host. There is an inevitability to this. The value maximizing host seem to be so called patent trolls.
The role of government is to set the rules/bounds for capitalism. With patents you could argue that there is a problem with the rules. But I don't think you can blame the players once the rules are set. Capitalism is not about morality, but profit maximizing and resource allocation. The solution is simple. Change the rules of the game.
As a side note Paul Graham's patent pledge attacks the wrong side of the problem and will therefore not be effective. Instead create a pledge for companies that want to change the game and let them be vocal about it.
Seeing capitalism as amoral discounts the fact that capitalism a system used by humans. It's humans who are being amoral to attempt to enforce obviously bad patents. A rational and moral human shouldn't enforce (or consider there to be any value in) a patent that is obviously overly broad -- any more than a rational and moral human shouldn't attempt to steal someone's house because of an error made by the government in recording the deed.
I vehemently disagree that you can "blame" the patents. It's humans all the way down.
I agree with you on the STRATEGY -- the best way to fix the problems is to change the rules. But I will continue to call people amoral/unethical and lob lots of hate in their direction when their behavior justifies it, regardless of whether they are technically breaking the law. A parasite is a parasite.
Ask the shareholders. And since I am one I'll answer.
I don't have a problem with this at all. $300M is about 1/1000 of the current market cap. The rewards are spread over 10 years. So 1/10000 per year to have a world class CEO running the company. Would I pay that? Gladly.
I agree. I think pg's equity equation[1] is applicable here. If Tim Cook keeps Apple on the trajectory it's on now, Apple's shareholders will get a great return on this investment.
Give me a break, you don't think you could've gotten him cheaper?
What's the difference between 580 million and, say, 200 million? It's funny money either way, and the person's quality of work is going to depend on other motivations.
Right - because chiseling the incoming CEO is exactly what you want to be doing when the entire world is looking at you for signs of confidence. You've got a market cap that's a third of a trillion dollars, and THIS is how you handle the most sensitive transaction imaginable?
Christ, what total lunacy.
And what if Cook decided this is bullshit, and goes? Then what? That's right, total implosion. And for nothing.
And by the way, since when is 'cheap' a part of anything that Apple does?
Again, what makes you think 'cheap' is how Apple wants to be perceived?
Pay more, demand more, get more. Only idiots (or the truly broke) focus on cheap when they're standing in the spotlight. What you really want is value. And given that their stock didn't crater in what is, again, the most sensitive transition imaginable, their non-asshole savvy already paid for itself several times over in the last 48 hours alone.
If you're going to cut corners, play lowball, or just or drive a hard bargain, fine. But be sure you're doing it in places where you can afford to lose he deal.
The actual situation seems to be that they're throwing an absurd amount of this guy because they want it to look good.
Look, I'm not an Apple investor and I haven't bought any apple products in the last couple years or so, I really don't care and it's not my business. But with my read on human nature, the guy would do the same exact job for 10 mil a year as he would for 58 mil a year.
True. But to go a level deeper, Facebook is dangerous to Google, because:
1) The competitive advantage of AdSense ($10 billion in annualized revenue) is all about having better user profiles that can translate into better syndicated ads. Facebook will undoubtedly launch a competitor given the hires they have made.
2) The competitive advantage of AdWords ($20 billion in annualized revenue) is mostly about having better search results. Again driven by better user understanding.
Facebook has excellent information on users interests. As opposed to MySpace and Twitter, most of the data on Facebook is not crawlable. It's private data, which means that Google is completely locked out. Even if it was crawlable, the data is not as valuable since Google would have to try to interpret it, while Facebook knows what it really means.
Summary: Facebook is an existential threat to Google's two major lines of business AdSense and AdWords. This is going to be a huge drawn out battle. Sit back and enjoy the show.
Adsense revenue is driven by purchase intent. "LA to Chicago flights" is a goldmine for advertisers. "Johnny posts a lot of movie reviews so let's target him a Netflix ad" is nice but it's no where near the same as a direct search with intent to purchase.
And my assessment is that the article is wrong. Google+'s goal is absolutely to kill Facebook. With something this important to Google, they want to control it themselves. If not, there is always the chance that Facebook will screw them over at the next opportunity and the battle restarts.
I think you're both right. I'm sure they'd prefer to beat Facebook, but they probably consider that a stretch goal. However, forcing Facebook to open up would also be considered a victory, IMO.
Pointless generalization. Engineers have their place: as individual contributors without customer facing roles. Not at the top or any management position.
Finding a sustainable way to reduce reliance on these companies should be the #1 job of the Mozilla business team in the next 3 years, before the deal comes up for renewal.