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.
Firefoxs default search engine has become the subject of a hotly contested legal battle, a few weeks after Mozilla announced it would be moving from Yahoo to Google. Yahoos new parent Oath filed a complaint against Mozilla in a California court on December 1, alleging a breach of contract. Now Mozilla has filed a counter complaint, stating that the switch back was in line with a deal struck between the two companies. Sounds like a small thing, sure, but were talking hundreds of millions of dollars here. Back in 2014, Yahoo struck a deal that would make its search engine the default for Mozillas popular, if struggling, browser, to the tune of $375 million a year. Details of the deal were only made public last year, as CEO Marissa Mayers time at the company came under the microscope while it prepared to sell itself to Verizon. For its many faults, the Verizon deal went through, of course, forming Oath in the process (the Yahoo/AOL hybrid under which TechCrunch resides). Along with it, Verizon inherited an annual payment of $375 million through 2019. Not a bad deal for Mozilla, especially when one considers this little gem: Yahoo (or whoever owns Yahoo) is obligated to continue payments, even if Mozilla were to, say, drop the search engine as its default. Mozilla was given a contractual right to terminate the agreement, if Yahoo was found unacceptable for some reason. That precise thing occurred just a few weeks back, as the company launched its new Quantum browser, switching back to Google in the process. The latest version of Firefox has been warmly regarded by many as a return to form for a company that had previously been lost in the woods, rapidly losing marketshare to Chrome in the process. Naturally, Oath/Yahoo want a piece of that action. In yesterdays counter-complaint, Mozilla explains that it took another long look at the deal post-Verizon acquisition and was no longer in love with its choice of Yahoo as the default engine. Immediately following Yahoos acquisition, we undertook a lengthy, multi-month process to seek assurances from Yahoo and its acquirers with respect to those factors, the company explained in a blog post yesterday. 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. Oath has not yet issued an official response to Mozillas official response.