If you thought that Google was going to stick a lump of coal in Firefox's stocking this holiday season, you weren't alone.
Although rumors of Firefox's imminent demise were premature at best -- and self-serving for more than a few -- the Mozilla Blog now brings happy news that "we have negotiated a significant and mutually beneficial revenue agreement with Google. This new agreement extends our long term search relationship with Google for at least three additional years."
Mozilla will continue to feature Google as the default search engine in Firefox, and Google will pay Mozilla an undisclosed amount in exchange for that placement. Definition of the term "significant" remains nebulous, but in 2008 Google provided 88 percent of Mozilla's revenue; in 2009 it was 86 percent; and in 2010 Google kicked in 84 percent, or about $103 million (PDF).
Firefox has long been dependent on Google's financial support. Many people don't seem to realize -- or accept the fact -- that it works the other way too: Google needs Firefox. Google's maintaining pressure on Microsoft, both in the browser market and in the search market, by keeping Firefox alive and kicking. If Firefox only had a tiny percentage of the browser market, its demise wouldn't make much difference. But right now Firefox is an equal partner with Google in a very effective squeeze play, aimed at IE.
The money's in search, not the browser. Google's enlisting Firefox to squeeze the browser market specifically to minimize Microsoft's ability to ship Bing with every copy of IE. Internet Explorer's market share continues to drift down to the 50 percent mark. Bing and Yahoo's combined U.S. search market share has hovered around 30 percent all year; Microsoft pouring billions of dollars into Bing hasn't made any noticeable difference. Google needs Firefox to keep those trends going.
Nobody knows that better than Firefox. This funding announcement sheds light on Mozilla's roundly criticized release just two months ago of "Firefox with Bing," a version of Firefox jury-rigged with Microsoft's Bing as the default search engine (both in the search box and in the address bar) and Bing as the default home page. Longtime Firefox developers, faced with an apparently unholy alliance of epic proportions, bellowed and stormed and even threatened to quit. Now it appears as if Mozilla created the changeling to show that, in fact, it could swap alliances without self-immolating. No doubt that demonstration had an effect on the negotiations with Google.
There's speculation in the computer press that Google and Microsoft were actively involved in a bidding war over Firefox's affections, if not affiliations. I haven't seen or heard any evidence to support the existence of a battle, but the "Firefox with Bing" exercise certainly points toward the possibility. If there was some discussion with the folks in Redmond, it looks like Microsoft wasn't interested -- or wasn't interested enough. That's understandable. With Yahoo's future uncertain -- Microsoft, Silver Lake Partners, and Andreesen Horowitz are still rumored to be in the running to buy a minor stake -- perhaps Microsoft is waiting to see if its search agreement with Yahoo will survive a takeover, breakup, or restructuring of Yahoo. Bing could end up being a very expensive orphan.
The bottom line for those of us who use Firefox: The future looks better now than it has in many months. Chrome may eclipse Firefox in market share, but there's still a lot of life left in the fox -- and plenty of reasons, measured in search-sourced greenbacks, for Google to continue to support it.
This story, "Why Google needs Firefox now more than ever," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.