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Comment by scarmig | Hacker News Reader

What's actually being paid for, here?

It could be the case that having Google as the default in Firefox will pay for itself through advertising. Anyone have any feel for how likely that is?

If it isn't, is it an attempt to buy good will? Trying to gain some leverage over Mozilla when it comes to taking sides in the standards war?

Or just the idea that any time Firefox gains a user is a time that Safari or IE isn't gaining that user, and that any marginal hits to the adoption of Chrome are disproportionately compensated by hits to the adoption of competing browsers?

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It could be the case that having Google as the default in Firefox will pay for itself through advertising.

Of course it will, easily

(Seriously - people should understand that Google's business is search (and advertising), and they want to commoditize its complements - browsers and phones with browsers on them).

Google does roughly 1 billion searches a day[1], and makes conservatively $0.08 per search[2]. Firefox has roughly 25% market share.

$0.08 * 1,000,000,000 * 0.25 = $20,000,000 per day.

Yearly revenue = $7,300,000,000 = $7.3 billion

Reasonableness check: Google's yearly revenue = $29.3 billion. $29/4 (ie, Firefox at 25%) = $7.25 billion, which seems roughly right.

[1] http://www.jeffbullas.com/2011/05/16/50-amazing-facts-and-fi...

[2] http://www.quora.com/How-much-revenue-does-Google-make-per-q...

That estimate seems pretty far off.

First, I think it's only fair to attribute ~1/2 of their revenue to search. You've got to give a lot to web ads, gmail ads, etc.

Second, I'm not sure it's quite fair to give FF 25% of their total search. It may be 25% of their desktop search, but mobile search is getting bigger and bigger. I'd say 25% is at best an upper bound.

Third, I think a large number of FF users would use Google search even if that required changing the default. I'd guess that it's on the order of 50%. The value of the deal is only the value of the searches they gain.

That said, even if you divide by 10, spending $300M to making $700M and get goodwill with developers is a great deal.

> I think a large number of FF users would use Google search even if that required changing the default. I'd guess that it's on the order of 50%.

I think you're overestimating the degree to which the average user is willing to make any changes to any default functionality. Remember, these are the people who google "google".

That estimate seems pretty far off.

Well, it may well be 50% off, or even 80% off, but it does give you an order of magnitude. 100% correct numbers aren't really material: this is a really good deal for Google.

You are right that not all their revenue comes from search, and I should have thought of that. 66% of their revenue is from Google websites[1]. They don't break that down, but I'd suspect 90% is search (Youtube is probably a reasonable contributor but search ads are very expensive, and Google gets pretty good fill rates on them).

Mobile search is growing quickly, but they still "only" made $2.5 billion over the last 12 months from it (and also I presume this deal covers the Firefox mobile browser, which might not be popular now but Mozilla has been working hard on).

But yes, 25% market share is probably an upper bound.

I think a large number of FF users would use Google search even if that required changing the default.

It is possible that Mozilla could do a deal to change the search engine used on existing installs. I would hope they wouldn't do that, but it is something another search engine would probably have wanted to explore.

Also, about:home is the default home page on Firefox, and currently defaults to a Mozilla branded Google search page. That could be changed on existing browsers for sure.

All up, I agree that the $7.2 billion number is probably high, but it seems likely it would be more than $1-2 billion.

[1] http://investor.google.com/documents/20100331_google_10Q.htm...

[2] http://searchengineland.com/will-google-see-6-25-billion-in-...

If this was such a great money making deal for Google why did Microsoft not bid higher? They have similar monetization strategy for Bing and would have similar ROI for gaining searches. Plus, MS is flush with cash and have a great desire to compete with Google.

[edit grammar]

Microsoft would love to, but they can't afford it. Bing is already losing huge amounts of money, and doing yet another deal for market share isn't going to be popular within MS unless it is profitable.

While MS could make money on a Firefox deal, they can't nearly make as much as Google can simply because Microsoft can't monetize the users as well as Google can.

You can see this on the demand side - many people try out new keyword advertising campaigns on Bing because they are so much cheaper than on Google.

Once they are confident they have a good set of keywords, they switch straight to Google (and at best keep the Bing campaign going). They'll pay more at Google, but get so much more traffic it is worth it.

Good point.

Do you think Bing could be monetized at a similar rate to Google if their market shares were similar? Or are there other things Google are doing (e.g. better add targeting) that is making them more money per search?

Hard to know. Google does have better targeting at the moment.

Back when Yahoo was a player they built a platform that was supposed to match Google (Yahoo Panama[1]) that was their big hope of matching Google. It didn't succeed.

[1] http://en.wikipedia.org/wiki/Yahoo!_Search_Marketing#Details...

The trick is figuring out how many users would use the Firefox search box vs would just enter google.com into the URL the old fashioned way (or would change the search box back to Google). I have no doubt Google is measuring that number and used it to guide their bidding.

My hunch is that Google is only breaking close to even with this deal (i.e. making $300M for paying $300M) and bid high just to keep too many people from trying Bing.

Plus, Google tends to act at least a little altruistic when it comes to the web [1] and may mind less being generous to Firefox.

[1] http://wikimediafoundation.org/wiki/Press_releases/Wikimedia...

Hunches aren't very useful without hard data. More practically, defensible logic is good practice on HN, because people try and build real businesses based on what they read here.

A month ago many people thought that Mozilla was going to be in financial trouble because "they couldn't re-sign the Google deal". That seemed to be based on little more than a hunch, which data showed that was clearly wrong (which I pointed out at the time).

Note that a donation to Wikipedia is very different (for tax purposes) to a business arrangement with Mozilla.

(I do agree that Google is good to the web though)

Also, Firefox users are far more likely to be using AdBlock than Chrome or Internet Explorer users. (yes, Chrome too. Ever since Google featured it on their homepage for a while, average Joes have become fairly likely to be using it)

what they are paying for is the portion of users who wouldn't use Google search if it wasn't the default.

So more like 30-40% of the 25% Firefox market share.

Still very worthwhile for Google, and explains why Firefox held out for more.

> What's actually being paid for, here?

The same as with Google's previous deals with Mozilla, Opera, etc.

By being the default search engine, Google gets more prominent placement in the browser. Were Google to no longer be the default in Firefox, some users would use alternatives to Google - either because they just leave the non-Google default because it is good enough, or because they are exposed for the first time to the alternatives, and they find they like them - all of which Google wants to prevent at all costs.

Another way to look at this is that there were some estimates thrown around during the Flock days of how much advertising revenue a browser generates for a search engine (this was Flock's proposed business model). I think I remember $1-2 per user per year. That should actually be higher today, assuming in the ensuing years search engines have gotten better at monetizing traffic which seems reasonable. Given that, $300M sounds about right given the amount of users Firefox has - apparently Firefox was receiving below market value before.

>Anyone have any feel for how likely that is?

As a rough napkin calculation, Firefox has 25% of the market share. So, roughly, 25% of Google's revenue comes from FF users. That's ~ $7.5BB annually. Now, as to how many of those users would manually choose to use Google for search, I don't think anyone can say for sure (although I'm sure Google has made a good estimate). Suffice to say, Google clearly sees it as worth their while to pony up and keep those users directed towards them by default.

Woah, big leaps here. First, just because firefox has 25% of the browser market share most certainly does not mean that they provide 25% of google searches! What about all the searches through google's homepage, mobile, custom site search, etc, etc. A lot of people still use the homepage (I know, not very many amongst the tech savvy).

Secondly, whilst most of google's income is advertising, not all of it is income from advertising on their main search results page- doubleclick, adwords, etc, etc. Lots more stuff there.

I would place it for a rough guess AT MOST 10% of google's income comes from firefox.

A lot of people still use the homepage

The default Firefox home page (about:home) is a branded Google search. Combine that and the Firefox search box and I would bet you cover 90% of the searches Firefox users do.

Anyway, even if it is 10% it doesn't change the outcome substantially - it drops the revenue to $3-4 billion instead of over $7 billion. Either way it is worth paying $300 million for.

Sorry, by homepage I meant typing in "www.google.com" and searching from there. Or typing google into the search bar and then getting to google, and typing the query there. Believe it or not, a lot of people still search these ways.

But yeah, def still worth it, I was just questioning the "25% of google's income" claim.

Edit: In fact, I found a source for these numbers: http://news.softpedia.com/news/Firefox-Google-Search-Box-Tra...

According to this [April 2010 - but I don't think firefox's market share has actually changed a lot since then], 82% of the search market is google, and 9.18% of the search market is searches from firefox via google. That puts firefox at 11% of google's searches. I think then about 8-9% of google income would be a good estimate- couldn't quickly find any data on what % of their income comes from search, but http://www.coastdigital.co.uk/news/google-gives-breakdown-of... shows that it def isn't 100%.

Google's product is not Chrome. Google's product is not search. Google's product is advertising. Search is how they deliver it, and browsers are how they deliver THAT.

Google doesn't care, financially speaking, if Chrome or Firefox does better in the marketplace. They care about the eyeballs that Firefox, Chrome, and any other browser can deliver to Google ads.

This is very wrong. Google cares deeply if Chrome wins. You are being way too narrow in your focus.

Advertising is not their product, it's their revenue stream. Their product is _everything_ that sits between a user and monetizing an ad. Just look at what they have done from an engineering, offensive and defensive position here. It's all about that ethereal space between users and monetization. That's the battlefield, and they want all of it.

They need FF because when Chrome dominates, FF needs to be a viable competitor. With Bing, it would be worse off.

True, but also, if Chrome wins, it means they don't have to care about these deals too much anymore. Because right now is Firefox switches search engine, it's very bad for Google. Chrome will never switch. So, yeah.

That and that they can use Chrome to lock people into Google services in the future.

Actually, Chrome gives the user a choice of search engine on first startup and does not have a default browser ( at least in the United States)

This is true, but it's also theatre.

>That and that they can use Chrome to lock people into Google services in the future.

Oh no, not more Chrome proves Google is evil...

The only thing I've seen from Google that is a move in this direction is that it will share the oAuth cookie between Chrome Sync and google.com pages to auto login if you're already logged into the browser.

I don't see how Chrome "locks people into Google services" any more than simply enabling them to get there faster (V8, SPDY, etc).

> What's actually being paid for, here?

For this - http://img585.imageshack.us/img585/7109/googlevy.png

$300M / (16*16 pixels) = ~$1M/pixel!

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