It looks like Mozilla is heading to court for a showdown with Yahoo Holdings and Oath over an alleged breach of contract. Yahoo Holdings and Oath, the company that runs the Yahoo search engine and which is owned by Verizon, filed a complaint against Mozilla with the Superior Court of California on Dec 1, after Mozilla revealed it was changing its default search engine. Today, Mozilla announced it was fighting back by filing a counter complaint. Mozilla unveiled its new lightning-fast Firefox Quantum browser three weeks ago, and the reception has been one of widespread adulation. Firefox, it seemed, was back with a bang. But alongside the launch, the company announced that it was ditching Yahoo as its default search engine in favor for the infinitely more popular Google. Mozilla, you see, had inked a deal with Yahoo in 2014 to make it the default search engine in the U.S for a full five-year period. Though users can switch their default search engine manually, having a search engine featured by default on a major browser like Firefox has a sizeable impact — five months after the Mozilla / Yahoo deal was inked, Yahoo said that its search volume reached a five-year high. And Google became pretty desperate to get people to switch their default search engine back — even placing messages at the top of search results. Last year, as Yahoo was preparing to sell to Verizon, a notable clause in the contract between Mozilla and Yahoo emerged. It effectively committed the acquiring company to pay Mozilla $375 million per year through 2019 if Mozilla wasnt pleased with its new partner. It also allowed Mozilla to walk away from the deal completely. Verizon isnt renowned for its commitment to search, and it doesnt seem like the most natural bed partner for Firefox, which may be why Mozilla pulled the plug on its Yahoo search deal. Many of the specific details of the counter complaints are redacted in the court filings, but Mozillas Denelle Dixon, chief business and legal officer, said that all the company had done was exercise its contractual rights, based on a number of factors, including doing whats best for our brand, our effort to provide quality web search, and the broader content experience for our users. Yahoos acquisition by Verizon wasnt in the best interests of Firefox users, according to Dixon, in terms of the search experience they would be presented with. And to rub salt in the wound, Mozzilla is pushing Oath — Verizons digital content subsidiary — to cough up the money it thinks its owed until 2019. That could work out to around $750 million, plus however much Mozilla is earning from Google as its new search partner. Here is Mozillas official statement in full: On December 1, Yahoo Holdings and Oath filed a legal complaint against Mozilla in Santa Clara County court claiming that we improperly terminated our agreement. On December 5, Mozilla filed a cross-complaint seeking to ensure that our rights under our contract with Yahoo are enforced. We recently exercised our contractual right to terminate our agreement with Yahoo based on a number of factors including doing whats best for our brand, our effort to provide quality web search, and the broader content experience for our users. Immediately following Yahoos acquisition, we undertook a lengthy, multi-month process to seek assurances from Yahoo and its acquirers with respect to those factors. When it became clear that continuing to use Yahoo as our default search provider would have a negative impact on all of the above, we exercised our contractual right to terminate the agreement and entered into an agreement with another provider. The terms of our contract are clear and our post-termination rights under our contract with Yahoo should continue to be enforced. We enter into all of our relationships with a shared goal to deliver a great user experience and further the web as an open platform. No relationship should end this way – litigation doesnt further any goals for the ecosystem. Still, we are proud of how we conducted our business and product work throughout the relationship, how we handled the termination of the agreement, and we are confident in our legal positions. We remain focused on the recent launch of Firefox Quantum and our commitment to protecting the internet as a global public resource, especially at a time when user rights like net neutrality and privacy are under attack.
It all comes down to one problematic contract clause made in 2014. Deals between web browser suppliers and search engine providers are big business. For Mozilla, agreements with search engines have brought in as much as US$300 million a year, which accounts for 90 percent of its income. So the stakes are high amid the latest tech company quarrel, which sees Mozilla end its partnership with Yahoo due to claims it hadn't been paid. Neither party is happy with the situation, so they're suing each other. Back in 2014 Mozilla and Yahoo struck a deal that would see Yahoo act as the default search engine in Firefox through 2019. But now, two years early, Firefox has reneged on the agreement, opting for Google instead. This seems like a shady thing to do, which is why Yahoo's parent company Oath -- which was created when owner Verizon merged Yahoo and Aol -- has filed a complaint, alleging the agreement has been terminated incorrectly. However, Mozilla claims its actions are in line with the contract that was signed at the time, which includes a clause that stipulates Yahoo must continue to make payments to Mozilla until the contract end date, even if Yahoo is no longer used as the default search engine. This problematic deal was struck by former CEO Marissa Mayer, who, in an attempt to lure Mozilla away from Google, offered the browser provider unprecedented protection in a change-of-control scenario, giving it the right to walk away from the partnership if it did not deem the new partner acceptable. Mayer was presumably under the impression it would never actually come to fruition, but Yahoo was this year bought under the Oath umbrella, and here we are. Mozilla wants Yahoo to continue making its annual payments even though it's no longer Firefox's default search browser, as the original contract stipulates, while Yahoo says it shouldn't have to because Mozilla isn't playing fair and besides, the problematic deal was made by Yahoo's former CEO and isn't necessarily indicative of the company's present-day vision. It's an interesting, messy case, and one we'll be hearing much more about in the future. Verizon owns Engadget's parent company, Oath (formerly AOL). Rest assured, Verizon has no control over our coverage. Engadget remains editorially independent.