Firefox has a reason to smile. The open-source web browser managed a hefty $300 million-a-year deal from Google (NASDAQ:GOOG), which ensures that Google Search remains the default search engine on the browser. The price seems high, but through this deal Google has managed to be the default search engine in over 70% of global web browsing, leaving competitors like Microsoft (NASDAQ:MSFT) Bing in the backdrop.
See our full analysis for Google’s stock
Firefox Revenue Heavily Reliant on Search Contract
Of Mozilla’s $123 million in 2010 revenues, almost 84% is generated through the search partnership contract it has with Google. Such a significant proportion means that a search contract is almost essential for the browser to sustain its revenues. To add to it, Firefox retains the top spot in global browsers with over 38% market share as of November 2011.
Source: W3Schools
This would invite a host of interested players including Microsoft’s Bing and Yahoo Search to strike a deal with Firefox as they could see gains to the much desired search market share. However, Google has deep pockets and has been willing to as much as triple its payout to Mozilla to keep this deal running. With a combined browser market share of 71%, Google is well poised to retain and expand its dominance in the global PC search market.
We currently have a price estimate near $628 for Google’s stock, which is in line with the current market price.
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