Firefox adoption rockets in January; good or bad for Google and Yahoo?

Includes: GOOG, MSFT, YHOO
by: David Jackson

Analytics firm WebSideStory reported (story via CRN) that as of January 14th, Firefox has 5% of the Web brower market, a full 1 percentage point higher than in early December. Firefox's adoption rate in the U.S. almost tripled during the last month, and as a result Microsoft's share is now on the cusp of falling through the 90% mark.

Now, it's obvious that the spread of Firefox is negative for Microsoft. But what about Google and Yahoo!? Here's are some points to consider:

Why the spread of Firefox helps Google:

  • Google is the default option in the convenient Firefox search window. That means that most people who download the browser will use Google search by default.

Why the spread of Firefox helps Google and Yahoo!:

  • I've argued that Microsoft could dominate the search market by building MSN search into a new version of Internet Explorer or a desktop search tool as the only option or the default option. It's therefore critical for Google and Yahoo that Microsoft lose its grip on the browser (or whatever client software is used to initiate searches) market.

Why Google and Yahoo may suffer from Firefox:

  • Venture capitalist Steve Hall raises an interesting issue
    about Firefox. One of the strengths of Firefox is its ease of customization. In particular, it's easy to customize the built-in search function to offer searches of specific e-commerce catalogs, comparison shopping engines and numerous other databases. Hall argues that this could
    negatively impact Google as users decide to search using other
    services. (You can view the list of niche search services that Hall has
    installed on his copy of Firefox here.)
  • Firefox (with its extensions) has better ad-blocking technology than IE. With a relatively limited amount of customization, Firefox can be set to block contextual ads from Google and Overture.

Conclusion: net impact of Firefox

  • Positive for Google. Most people will use the default search option; and most users (not the tech-savvy early adopters) will not use the ad-blocking or search customization tools. So Google's a net beneficiary.
  • Negative for Yahoo!. Most people don't use the default search option in IE, and find it more convenient to go to a Web page to initiate their searches. But Firefox makes it easier to search directly from the browser - and the default search is Google's. So Yahoo! will probably lose market share as Firefox adoption grows. Also, if people do use the ad-blocking extensions for Firefox, that will hit Yahoo's Overture business.