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Some additional data points to help parse this:

• the agreement appears to be with the Mozilla corporation, rather than the non-profit foundation... but the corporation is 100% owned by the foundation, so the distinction is mainly for tax/accounting/reporting advantages

• the prior agreement delivered over $80 million in yearly revenue to Mozilla (as of the last time I recall seeing credible numbers reported, a couple years ago)

• the prior agreement technically expired 3 weeks ago, so the multi-year renewal negotiations may have had some wrinkles

I hope Mozilla is now earning even more; with the rise of Chrome and iOS they may need it.

Admittedly I haven't paid close attention to the Mozilla Foundation even though I was an early firefox adopter and continue to use it on my macbook air...

tl;dr -- Google contract worth about 100 million in 2010 given the latest public numbers, more than 150% of the total engineering budget.

My rambling notes... I wanted to look into this corporation/foundation distinction to see how much money Mozilla gets from Google. Some highlights from Mozilla's 2010 financial report (2011 isn't out):

http://static.mozilla.com/moco/en-US/pdf/Mozilla%20Foundatio...

1) Mozilla doesn't live off our contributions, not by a long shot: Mozilla only had collected 150k in contributions throughout 2010 and expected at most 1.7 million total (there is a discrepancy in time between when the report is prepared and when donors may actually send the check they promised).

2) Mozilla received 121 million from "royalty revenue" -- anything related to the Mozilla brand: Amazon affiliate programs, search engine branding like this Google deal, and sale of products from the Mozilla shop.

3) According to note 9 (footnotes are always where all juicy info is buried), 84% of the royalty revenue from 2010 is from "a contract with a search engine provider for royalties which expires November 2011." I take that to mean the Google contract. 84% of 121 million is ~100 million.

4) Mozilla's burn rate was 62 million, which means Google paid for the entire Mozilla development effort in 2010. Interestingly Mozilla's burn rate increased 50% from 2009. I can speculate this is from the increased competition from Chrome, but who knows.

5) Mozilla held 105 million -- yes million -- in investments in 2010 (mostly bonds and index funds, check out note 3). Without Google, Mozilla can use this war chest to operate for at least 2 years. That's much, much better than most companies.

6) Last, as a side note: there was a re-org in early 2011 (which I had missed) where Mozilla seems to have folded the thunderbird effort in with the browser team. This could be a "synergy" move, but it likely means they are divesting from that business and putting more people on the browser effort.

About number 6: In 2008, Mozilla Foundation moved Thunderbird development out of Mozilla Corporation and into the newly created Mozilla Messaging corporation. In 2011, they reversed this.
Thanks for the info. Very interesting.

Burn rate of 62M is pretty high. That can fund about 300 people plus other costs like hosting. Is that only for the browser or for other projects as well?

Firefox is an amazing piece of software and the fine folks at Mozilla are always pushing the envelope of online experiences. Am happy that Mozilla folks can concentrate on the software for the next couple of years without having to worry about funding.
On that note, I'd still worry. Essentially, they have 3 years now to come up with some other means of funding. I've donated to them before, but I don't think they can stay afloat with just donations.
"Funding" makes it sound like Google is doing this out of charity, or like Mozilla is a pre-profit startup that needs outside investment. Neither is true.

Google isn't "funding" Mozilla; it's a customer of Mozilla. Their search traffic payments aren't charity or venture capital; they are revenue. Search engines are always willing to pay for large amounts of traffic. Even Opera reports significant revenue from their desktop browser [1][2], which has an order of magnitude fewer users than Firefox. This is not the first time the Google/Mozilla deal has been renewed in the past decade, and I doubt it will be the last. And there are other search engines who will also continue to pay for valuable traffic.

(Note that individual donations are still important for the non-profit Mozilla Foundation, since tax rules limit how Firefox revenue can be used for the Foundation's other activities. Donations help support Mozilla's other projects to build the open web like the current projects in education, journalism, video publishing, and online privacy.)

1: http://www.opera.com/company/investors/faq/

2: http://www.quora.com/How-does-Opera-Software-ASA-make-money

I agree but there are multiple options they could monetise. Extending Firefox Sync and have it sync more types of content. Browser ID could easily be a monetisable service. Reputation systems would be a great fit into browsers. There are many many ideas where Mozilla could make money.
Mozilla has got to find an alternate revenue stream. Maybe it can start charging for Firefox Sync space or something like that. Maybe it can take a cut of donations from Mozilla Addons or sell more prominent spots there. The fact of the matter is that it is immensely irresponsible to depend almost entirely on Google for operations. Google could pull an Enron and be gone tomorrow, Google's founders could die or resign and the company could fall to MBAs who don't understand the logic behind paying $100 million/yr to a competing web browser, and so forth. There has to be more money involved here if Mozilla expects to have longevity.

Really this is true of open-source software as a whole. There really needs to be a better way to monetize than begging for donations and/or selling T-shirts if these projects are going to live on. As times continue to turn tenuous, this will only become more crucial.

I fully believe in OSS and Mozilla specifically, but the reality is that we have to find a way for OSS to be at least somewhat profitable without relying on the goodwill of a handful (or less) of benevolent entities.

Goodwill? Do you think Google's shareholders get warm fuzzies when they see the news of this deal? This arrangement sends Google large amounts of traffic, from which they derive significant financial value. Stop calling this charity, it's a mutually beneficial arrangement.

Edit: I mentioned this before below, but I'll repeat it up here. I work for Mozilla, but was not involved in the inner workings of this deal. I'm stoked to know where my salary is coming from though :)

You think Mozilla really has much leverage in a situation like this? Google is the best search engine and everyone knows that. Mozilla would do their users a disservice by switching to Bing or something, and this could even be seen as a positive thing by Google due to the theory that it would drive more users to Chrome.

While I agree you can also look at this from a perspective of mutual benefit, it's certainly not an obvious open-and-shut deal, especially not with Chrome in the mix. It's simply a matter of priorities, and as I noted in the grandparent, it's easy to conceive a situation where this perspective may shift.

Also, I think that executives care about the opinions of shareholders about as much as Congresspeople care about the opinions of constituents, i.e., they don't care at all unless it looks like something will cause a major disruption to their continued employment.

it's funny to read that people think Google is just being nice paying Mozilla.

Google gets a LOT more money from Mozilla than Mozilla gets from Google! Firefox is not "1%" of the web browsers, its still the major one in many areas, this means billions and billions of Google search uses.

And it does actually please shareholders that such a deal is made. It's a HUGE difference.

Chrome may compete with Firefox, but Mozilla isn't a competitor for Google's profits or its core business.

As an analogy, consider Apple and Best Buy. Apple owns its own retail stores, and those stores are competition for Best Buy. But Apple isn't really in the business of retail; they have no reason to stop you from buying Macs and iPads at Best Buy. Retail is just a channel for Apple's real business, and its to their advantage to push their product through the channels they own and the channels they don't.

The browser is a channel for Google's core business of search advertising. Like Apple, they get some benefits from building and controlling a distribution channel of their own. But they have no motivation to stop pushing their core product to users of other browsers too.

I was under the impression that Mozilla also got a sizable chunk of revenue from Amazon. Every time I search Amazon, I do it via the browser search box, and there's a referral code appended. Even if Mozilla doesn't have a special agreement with Amazon (this would not surprise me), they would no doubt qualify for Amazon's highest volume-based advertising rate, which is 8.5% on all sales (excluding electronics and gift cards, which have a rate of 4% regardless of your referral-volume tier).

I presume that the same is also true of eBay in some fashion.

You may want to look into this -- it might be another add-on or toolbar you have installed, since Mozilla does not do that. (Disclaimer: Mozilla employee)
I always found it easier to type "ctrl/cmd-l amazon.com" and do my search than use the mouse to switch engines (is there a keyboard shortcut??) But, knowing that it can potentially benefit Mozilla, I will start using it more often now. Thanks.
Even if Google were to cease to exist tomorrow, this would not mean the end of this revenue stream. I think most people when talking about the Mozilla <-> Google relationship fail to recognize that this is a mutually beneficial arrangements.

Bing and other search providers would be willing to spend lots of money to have the default search status. Just because Google has always purchased this spot in the past does not mean that google is the only way Mozilla can monetize search.

Bing probably wouldn't be averse now, but it should be obvious that Microsoft also has a major conflict of interest in regard to paying Mozilla money for the top spot in search. With Microsoft's history, nobody should be surprised if they drop Mozilla after they use its traffic to establish Bing (and other MS properties, like IE, Windows, and Office) more fully, and nobody should be surprised when Bing plays dirty and intentionally degrades the experience for Firefox users in an attempt to compel a switch to IE or another MS platform.

While I don't believe that selling the default search spot is problematic, I do believe it's risky and dangerous to make that the primary source of revenue, especially when the major potential bidders have serious conflicts of interest with supporting Mozilla (that is, they provide competing or incompatible services and products).

Do you really think Google could vanish? Google search has become such a necessity in internet culture today, and culture is very hard to change.

Hell... "google" is a verb in the dictionary: http://www.merriam-webster.com/dictionary/google

The number of "necessities in internet culture" that are now largely irrelevant is pretty high. While dethroning Google would take a major upheaval, people thought Altavista, Excite, Lycos and Yahoo would grow into the sky too.
It doesn't have to vanish to get taken over by executives that don't see the value in providing such a huge chunk of money to a company that offers a competing product. In fact, I reckon that most business schools teach this kind of support for your competitor is extremely bad. We know that brilliant and awesome companies end up in the hands of MBAs and it's all downhill from there. Mozilla should certainly plan for this eventuality.
Mozilla could just sell the search bar to Bing or anyone else for that matter. This really isn't that dangerous unless searching the web as a whole "pulls an Enron" and people go back to browsing Yahoo! categories.
I love Firefox (and Chrome! no need to be zealots :D ), but I'm even happier that this means there will be no interruption to the full-time development of Mozilla's new systems programming language, Rust:

http://www.rust-lang.org/ https://github.com/graydon/rust

Coincidentally, for those who like to make much ado about Mozilla vs. Google, Rust has a lot of similarities to Go. (As both projects began as semi-secret, low-key affairs, this is due more to convergent evolution than anything.)

Is there any way to monetize legitimate software search traffic to a decent search engine without cutting a special deal like this?

I have an app-launcher-like project I'm working on that could benefit from this kind of arrangement, but browser toolbar scammers seem to have scorched the earth.

Anyway, great to see this deal continue. This is a great partnership that I presume both sides would like to keep going, but the details still have to work out right.

Sort of like Pixar and Disney in the 90's. Then again, Disney didn't figure out how to make Pixar-quality movies back then, yet Google has definitely figured out how to make a world-class browser.

No, not search engines. Merchant sites like Amazon on the other hand let you get affiliate money without having to bind a special deal.
i'm pretty sure google's custom search provides income from ads clicked through it.

https://www.google.com/cse/

You should check with IAC/Ask.com. They have a direct feed and are the go-to provider for resyndicated Google ads.
> The specific terms of this commercial agreement are subject to traditional confidentiality requirements, and we’re not at liberty to disclose them.

This sentence lets one think about the importance of openness in the Open Source community. I wonder if the community would accept the same clause if Microsoft/Bing were to provide the next three years of Firefox searching.

It's certainly unfortunate, but the business world does not work like the open source world. Nobody would do business with us if we required all of our contracts to be open like our code. We do things in the open as much as possible, but sometimes you have to be pragmatic.
Mozilla as an organisation is extremely transparent. It discloses as much as it legally and practically can.

That said, there are some things that simply cannot be disclosed.

Does that hurt Mozilla's mission? I doubt it. It is simply part of the operational process.

Have you seen Firefox with Bing btw?

http://www.firefoxwithbing.com/

I don't know if you realize this, but Firefox already includes Bing search by default. It's just not set as the default search engine.
There is already a version of Firefox packaged with Bing. http://www.firefoxwithbing.com/
> I wonder if the community would accept the same clause if Microsoft/Bing were to provide the next three years of Firefox searching.

Money is money. Absent some evidence of a conflict on the part of people at Mozilla, I would have no objection to that clause from MS/Bing. I would object to the deal as a whole on other grounds, though.

I've been using about:blank as my home page for awhile, does Google ever advertise Chrome on the default Google/Mozilla homepage?
I'm a Mozilla web developer. Mozilla controls the homepage now, and all "snippets" on the about:home page are for Mozilla-related projects or things we believe in.

So, no.

Mozilla's placement of Google as the default search engine in Firefox makes a huge difference in Google's continued position as the default search engine people turn to. Google at this point doesn't provide profoundly better search than anyone else; several other search engines exist which have results more or less as good as Google's, or possibly even epsilon better. Google has three things going for their search engine: the inertia of people using what they've gotten used to as long as it remains "good enough", the pile of other services Google offers that integrate very well with each other, and Google's position as the default search engine in most browsers.
I think it's more of Google practically being ingrained into people's heads as the way to get somewhere on the net. Time and time again I've seen people with MSN or Bing as their homepage, and they'll just search for "google".
At some point it should make sense for Mozilla to support Bing : Mozilla is here to bring a better internet, and there can only be a better internet with competition. MS is losing tons of money for operating Bing ; there is a risk that they decide to stop losses. If Bing was shut down Google would be the only lasting real player in the search space, and that would not bring a better internet. My 2c ;)
With Mozilla's downward slope in browser share, it seems smart to keep the relationship going for both of them. If Mozilla keeps losing ground to Chrome, Google wins. If Mozilla grows its userbase somehow, Google wins. Not to mention Mozilla keeps getting paid for what they do.
Would be interesting to see how much Google spends on Chrome development each year. I suppose it is much less than the estimated 100 million they pay Mozilla, so this alone would have been reason enough to create their own browser.
There is no way it is less than $100m. The Chrome team is at least the same size as the Firefox team, if not significantly larger. Google probably spent a good chunk of $100m on advertising Chrome; television spots and subway posters don't come cheap.
Google is not losing $100M. They are making $REFERRAL_REVENUE - $100M, which is presumably >> $0.
Err Chrome's global budget is several magnitudes higher than 100M.

I wouldn't be surprised if the dev alone would cost slightly over 100M. (And Mozilla runs the whole company on that, not just Firefox's dev)

Google spends way more than $100 million a year (estimates range from $500 million to $2 billion) on just advertising for Chrome.
Well that would be Mozilla's retirement fund..
I guess the "mutually beneficial revenue agreement with Google" contains Mozilla's agreement to support Dart.
The open governance of the Mozilla project is not subject to the sort of back-room dealings you imply.

(Disclosure: I work for Mozilla, but have no knowledge of the inner-workings of the new deal.)

You must not have read brendan's posts on HN about dart!