Google strikes search-en­gine deal with Mozilla

The Globe and Mail (BC Edition) - - REPORT ON BUSINESS - MARK BER­GEN

Mozilla Corp. rolled out a ma­jor up­date to its Fire­fox web browser on Tues­day with a bevy of new fea­tures, and one old fren­emy: Google.

In a blog post, Mozilla said Fire­fox’s de­fault search en­gine will be Google in the United States, Canada, Hong Kong and Tai­wan. The agree­ment re­calls a sim­i­lar, older deal that was scut­tled when Fire­fox and Google’s Chrome web browser be­came bit­ter ri­vals. Three years ago, Mozilla switched from Google to Ya­hoo Inc. as the de­fault Fire­fox search provider in the United States af­ter Ya­hoo agreed to pay more than $300-mil­lion (U.S.) a year over five years – more than Google was will­ing to pay.

The new Fire­fox deal could boost Google’s al­ready mas­sive share of the web-search mar­ket. When peo­ple use Fire­fox, Google’s search box will be on the launch page, prompt­ing users to type in valu­able queries that Google can sell ads against. But the agree­ment also adds an­other pay­ment that Al­pha­bet Inc.’s Google must make to part­ners that send on­line traf­fic to its search en­gine, a wor­ri­some cost for share­hold­ers.

It’s un­clear how much Google paid to re­claim this prized dig­i­tal spot. A Google spokes­woman con­firmed the deal but de­clined to com­ment fur­ther, and Mozilla didn’t dis­close fi­nan­cial de­tails.

As Google’s ad sales keep ris­ing, so too has the amount it must dole out to browsers, mo­bilede­vice mak­ers and other dis­tri­bu­tion chan­nels to en­sure that Google’s search, video ser­vice and dig­i­tal ads are seen. Those sums, called Traf­fic Ac­qui­si­tion Costs or TAC, rose to $5.5-bil­lion dur­ing the third quar­ter, or 23 per cent of ad rev­enue.

Last quar­ter, the in­crease in TAC was pri­mar­ily due to “changes in part­ner agree­ments,” Google chief fi­nan­cial of­fi­cer Ruth Po­rat said on the earn­ings call. She de­clined to dis­close spe­cific part­ners. A lot of th­ese pay­ments go to Ap­ple Inc., which runs Google search as the de­fault on its Sa­fari browser. In the third quar­ter, the TAC Google paid to dis­tri­bu­tion part­ners, such as Ap­ple, jumped 54 per cent to $2.4-bil­lion.

Google is likely pay­ing Mozilla less than Ap­ple for search rights. In 2014, Ya­hoo’s then-chief ex­ec­u­tive of­fi­cer, Marissa Mayer, lob­bied heav­ily for the Fire­fox deal by agree­ing to pay $375-mil­lion a year, ac­cord­ing to reg­u­la­tory fil­ings. Google paid $1-bil­lion to Ap­ple in 2014 to keep its search bar on iPhones, ac­cord­ing to court records.

Bloomberg News Al­pha­bet (GOOGL) Close: $1,041.64 (U.S.), up 44¢

MARCIO JOSE SANCHEZ/ASSOCIATED PRESS

Google, whose head­quar­ters in Moun­tain View, Calif., are seen above, could boost its al­ready mas­sive web-search mar­ket share with a deal to make the plat­form Fire­fox’s de­fault search en­gine.

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