Google Pays to Put Search Back on Firefox Browser in U.S.

(Bloomberg) -- 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 U.S., 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 U.S. after Yahoo agreed to pay more than $300 million a year over five years -- more than Google was willing to pay.

Verizon Communications Inc., the new owner of Yahoo, didn’t sound happy about the new agreement. 

"Yahoo and Mozilla have enjoyed a productive relationship together since 2014," said Charles Stewart, a spokesman for Verizon’s digital advertising business, Oath. "We are surprised that Mozilla has decided to take another path and we are in discussions with them regarding the terms of our agreement."

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, mobile device 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 percent 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 September, Apple added Google search as the default provider for questions people ask Apple’s voice-based assistant Siri, replacing Microsoft Corp.’s Bing. In the third quarter, the TAC Google paid to distribution partners, like Apple, jumped 54 percent 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.

Firefox once commanded roughly a fourth of the web browser market, but its share has slid in recent years. It now controls 6 percent of the global market, according to research firm Statcounter. Apple’s Safari holds 15 percent followed by Alibaba’s UC Browser with 8 percent. Google’s Chrome browser has 55 percent of the market.

To contact the reporters on this story: Mark Bergen in San Francisco at mbergen10@bloomberg.net, Scott Moritz in New York at smoritz6@bloomberg.net.

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Alistair Barr

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