Apple/Mozilla Flap Is Really About Google Revenue

Apple (Nasdaq: AAPL) pushes Safari to you when you update iTunes. Mozilla CEO John Lilly blasted the move. Meanwhile, there’s enough hubbub to last a few weeks over these dueling point of views. But what this spat really comes down to is Google and the fees it pays to be the lead search dog within browsers.

A few quick thoughts:

• The fact Apple is pushing Safari via its iTunes updates isn’t surprising. In fact, Apple told you that this was going to be its move with Safari for Windows. In this respect, Apple is no different than any other software vendor that always tries to push you a bundle. Nefarious? Hardly. It’s just Apple trying to grab more share. Ultimately, you are responsible for what you install.
• So why the Mozilla hubbub? Firefox has more than a third of the browser market. If Apple leverages iTunes and the software update bundle Safari could grab more market share. Lilly writes in his blog post: “What Apple is doing now with their Apple Software Update on Windows is wrong. It undermines the trust relationship great companies have with their customers, and that’s bad — not just for Apple, but for the security of the whole Web.”

What’s stunning to me is that after three days of debate about this issue there aren’t many folks who have mentioned that little search box in the right corner. Let’s be clear: Google bankrolls Mozilla and accounts for most of its revenue. Google pays to be the leading provider in the Firefox search box. Sure, you can pick other search engines, but few do. As a result, Google accounted for 85 percent of Mozilla’s 2006 revenue of $66.8 million. The more market share Firefox has the more Google pays to be top search dog.

In that context, it’s pretty clear what this Mozilla vs. Apple rift is about. Apple also has Google in its search box and while details aren’t disclosed it’s safe to say there’s some cash changing hands. Google’s fees to Apple aren’t likely to be material, but Safari’s market share gains could be a headache for Mozilla.

Let’s say Safari grabs 10 percent market share and Firefox falls to about 25 percent. That’s fewer searches and less revenue for Mozilla. Sure, you can argue about whether Apple’s Safari move is above the board. You can also question the security implications and a bevy of other issues. But in the end, Apple’s Safari update and Mozilla’s reaction is like any other story. To truly understand it you have to follow the money.

Comments

[michiganjake:]

Very well written and thought out Larry. Safari is fast and efficient. The more people are exposed to it the more they will understand its value. I have used both Firefox and Safari and have found Safari to be faster and more reliable.

2008 Mar 24 07:47 AM

[norm:]

I do not understand the fuss. When there is a Firefox update the program alerts you and offers a one-click update capability. I don't see that as much different than Apple offering the update via Software Update. Browser use is a user preference. I prefer Safari over Firefox but other Mac users prefer Firefox over Safari.

2008 Mar 24 08:03 AM

[JIM:]

The 'uproar' about Apple's desire to have folks adopt Safari is ridiculous. Folks with agendas are doing some sabre rattling claiming that the company is 'spamming', etc. by packaging safari (optionally) with iTunes. What's the harm in that? If you don't want to use the browser, uncheck the option box. Simple as that. Meantime, it's a great browser. Fast and efficient. The negative chatter and din you hear these days may be coming from clueless folks who don't perceive Apple's business model, or are foolishly trying to short the stock-- a suicidal move to be sure.

2008 Mar 24 08:08 AM

[digivision:]

this brings back memories when Microsoft was the target of criticism and antitrust folks.. there is a big difference between the 2 companies
Apple does not force you to use Safari(the best browser to my opinion)
simply offers you a package to download, it takes a few minutes to download safari but only seconds to delete it .
On the other hand Microsoft did something more than just that , they made it nearly impossible for windows 95-98 to run properly without explorer and WM player , they imposed their software and most regular users did not have a clue on how to remove them properly from their system . I have a feeling they are setting up Apple to some major antitrust issues unnecessarily

2008 Mar 24 09:03 AM

[TrickleThis:]

re: barbarian comment - do you really think that apple wants its tactics compared to microsoft? apple is supposed to be better than that. that's their brand. they just spent a big chunk of that equity and goodwill by stooping instead of rising above.

2008 Mar 24 11:10 AM

[TrickleThis:]

re: barbarian comment - do you really think that apple wants its tactics compared to microsoft? apple is supposed to be better than that. that's their brand. they just spent a big chunk of that equity and goodwill by stooping instead of rising above. apple made this download appear to be part of the normal upgrade for two other products. it wasn't. that makes apple's action consumer unfriendly, which, as barbarian aptly points out, brings to mind the evil spector of microsoft. too bad. safari may be a great product - better than its rivals, but to many consumers it now equates with evil.

2008 Mar 24 11:15 AM

[TrickleThis:]

...what's worse, instead of being excited and interested in any new apple innovation that comes to market... consumers must now be wary. Larry may think that's okay "in the context" of Mozilla's reaction, but consumers aren't going to weigh choices about apple based on Mozilla.

2008 Mar 24 12:31 PM

[TanToday:]

Oh my....HORRORS....Apple offered folks a totally FREE browser if they elected to take it....

RUN...run...the sky is falling!!

2008 Mar 24 07:10 PM

[bryanz:]

It's not about AAPL "offering" a free browser to folks. It's about Apple taking advantage of the "Click Next, click next, click next..." mentality of the majority of computer users. I have no qualms with Safari. I tried it out once, it was alright but not enough to pull me away from Firefox because I was happy using it. But the "uproar" is over software that was NOT previously installed on a user's computer being installed without most users probably understanding what they are installing. The Mozilla CEO's comparison to malware was exaggerated, but the tactic is certainly on the fuzzy side of ethical, especially considering that AAPL is supposed to be the hip, cool company with fashionable electronics and a strong fanbase. Should users look before the click Next, Next, Next? ABSOLUTELY. However should AAPL just assume that everyone that has iTunes must want Safari? ABSOLUTELY NOT.

@norm's comment about Firefox UPDATES, that comparison is unfair. You don't get an "update" from Mozilla unless you have Firefox already installed. AAPL is piggybacking Safari as an update to iTunes, which it's clearly not. If Safari was required for iTunes to run, then you'd have a case. What you're arguing would be equivalent to Mozilla pushing Thunderbird (email client) out as an update to Firefox. They're two completely disparate applications and one runs fine without the other. Ergo, one is not an "update" to the other.

All that being said, this whole thing is blown out of proportion and I did enjoy reading the article. And I'm still long AAPL. =)

2008 Mar 24 11:22 PM

[Jax3:]

It is not "evil" to send you a piece of software that is part of a computer ecosystem that you have a piece of already. If it were not a top quality browser and hadn't just been upgraded and already installed on most Macs it would require a sales pitch to get you to go look for it and download it. It was a favor for me in that I forgot they were upgrading it. This is a business decision for the company and its customers. I certainly wish a lot of other companies would keep their products in update mode and give the upgrades to me. I like FrFx too and I do wonder why they require so many updates. Anyway tempest in the ether zone.

2008 Mar 25 07:43 PM