On the New Firefox-Yahoo Alliance

In a recent blog post about Apple’s new privacy features, I made the case that it would be wise for Apple to go ahead and switch DuckDuckGo to the default search engine in its Safari browser so as to take a swing at the bottom line of its primary competitor in the smartphone market, Google.

I guess the folks at Mozilla — creators of the Firefox browser — must have read my blog post and thought it was a good idea, because last week, Mozilla announced that it had struck a deal to make Yahoo the browser’s default search engine. Closing out a multi-year deal with Google that accounted for about 90% ($274 million) of Mozilla’s annual revenue, Firefox will now, by default, refer its US searchers to Yahoo.

It is assumed that Yahoo made a comparatively attractive offer to Firefox in order to oust Google. While that is likely the case, Firefox has vested interests, similar to those of Apple that I wrote about previously, in cutting off its business ties with its competitor Google.

Until 2009, Firefox had a substantial share of browser usage and was the go-to free browser for those fed up with Internet Explorer. At its height in 2009, Firefox was preferred by 48% of Web users, compared to Internet Explorer’s 40%. But after its release in late 2008, Google Chrome has steadily grown in market share, first taking away most of Internet Explorer’s share, and then cutting into that of Firefox. Today, Google Chrome is preferred by roughly 60% of users, Internet Explorer by only 9%, and Firefox by 24%. Google Chrome has, in five years, cut in half Firefox’s following in order to acquire over half of the browser market share.

Even though Firefox’s still-respectable browser market share has given it the leverage to charge Google $274 million per year for preferred search engine status, I am sure it has pained Mozilla to have sent 100 billion searches a year to Google, search traffic that has helped Google fund and improve its Chrome browser — a losing long-term game for Mozilla. So when Yahoo came along with a suitable offer to make the switch, I am sure Firefox was eager to strike a deal.

Firefox’s new partnership with Yahoo could have several positive effects on the browser and search engine markets for us users/consumers:

  • The billions of searches that Yahoo will now garner from Firefox referrals could give it the ad revenue and opportunity it needs to improve its search algorithm and user interface towards the aim of expanding its currently low 10% search engine market share. Indeed, Yahoo announced that it will release a “clean and modern” search engine for Firefox in December.
  • Since Yahoo has become famous for its defiance of the NSA’s demands for user data, Firefox could tout its break from Google and its new partnership with Yahoo in order to foster its brand as the privacy alternative to Google’s and Microsoft’s browsers, perhaps to the effect of rebounding its browser market share by upgrading its own privacy features.
  • Google may have to improve its own family of services and strike new deals in order to make up for the loss of Firefox’s billions of referrals.
  • Google used to be Firefox’s default search engine worldwide. But after the split, Firefox made country-specific deals with regional search engines, including Baidu in China and Yandex in Russia. In many markets, we may see an opportunity for smaller, regional search engines to improve and grow and make deals with Firefox, further diversifying the search engine market.

Time will tell what changes will come of the new Firefox-Yahoo alliance, but it is certain to shake things up in the browser/search engine arena.

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