Why Google Pays 10 Billion USD to Its Competitor Mozilla?

To Make Google as the default search engine, Google and Mozilla will renew the cooperation agreement at around 10 billion USD. In the case of haveing their own web browser "Chrome", Google's cooperation with Mozilla is understood as a kind of support to their competitor with their money. But Why?

On one hand, Firefox still has millions of users and this agreement means that millions of users will use Google as the default search engine when they are using Firefox. And using Google to search means Google can display ads and that means money to Google.

But 3 billion per year, that is 3 times more than the price in the agreement they signed in 2008. What's interesting is that Google released Chrome after they signed the agreement in 2008. From a common point of view, with the raise of the Chrome's share in web browser market, they should reach an agreement at a lower price. Although Firefox still takes up 1/3 of the web broswer market, their share is going down and the reason is Chrome.

Chrome is like a beast in the market of browser, it is swallowing the share of IE and also Firefox at the same time. Actually, according the the data from StatCounter, Firefox's share in browser market is lower than 2008. Think about it. Aug, 2008, 26.08% of people were using Firefox as their browser, 68.91% were using IE and at that time, Chrome was not released by Google. Last month, 25.23% of people were using Firefox as their default web browser and 40.63% of them were using IE. Chrome took 25.69% of the market. It's true that more people are choosing Chrome as their default web browser than choosing Firefox.

So Google will pay 3 times money, while Firefox's share in browser market is lower than 2008. Why they do that?

The first reason comes to my mind is the competition. Because of the bid. Microsoft wants Bing become the default search engine of Firefox. And it is really interesting that Yahoo also takes part in the bid and Yahoo's search engine is from Bing. So one reason is that Google spend money to let Microsoft and Yahoo out of the game. It's possible.

Microsoft spends billions of USD to try to compete with Google in search engine market. One of the result of this is that Google and Bing swallow Yahoo's share in search engine market together. Now Bing provides the result of Yahoo's search engine, so Bing hurts itself. Nowadays, Bing and Yahoo take the same percent of the search engine market share and Bing is paying this. Here I have to say that Bing and Firefox's cooperation is do useful to Bing. Let's say that Bing know that and when they talking about the cooperation, they are not cheapskate, but they are not that generous and will pay 3 billion a year. Because from the market share, 3 billion is a little crazy.

So why Google still pay this high price to Firefox? Analyst said that compare with the income from displaying ads through Firefox and competition with Bing, avoiding the problem of anti-monopoly after Chrome's share continue growing is the real problem Google cares.

It's not crazy, actually if now it is not the reason, it will be the reason in future. So far, it is relatively safe for Google's browser market in anti-monopoly. They are not like Microsoft and Apple, Google can not control the default browser in any kind of operation system. However, the problem will become more and more serious with the large download of Chrome from google.com and the success of Chrome OS. I think there will be a larger pressure from mobile devices. Now, web browser on Android devices looks like a normal browser, with more and more element from Chrome are added to it. It will become the real Chrome some day.

That means Google has a dominant operation system (Android) to promote their web browser. That will bring investigation from anti-monopoly just like Microsoft few years ago. But if Google pays money to support Mozilla and Firefox, it's another question. Let's wait and see.