Yahoo Acquires Morzilla: Mozilla could get $1 billion if Yahoo is purchased

Yahoo Acquires Morzilla: Mozilla could get $1 billion if Yahoo is purchased

Yahoo is up for grabs, and there are some big hitters trying to get the former champion of search. In an odd twist of fate, the biggest winner in all of this may actually be Mozilla, who stand to reap a billion dollar payday.

Recode has discovered a clause in Mozilla’s contract with Yahoo stating that if it doesn’t like who purchases Yahoo, Mozilla is entitled to three annual payments of $375 million through 2019.

It’s part of a deal struck by Yahoo CEO Marissa Mayer in 2014, making it the default search engine for Mozilla’s Firefox browser. She couldn’t offer Google money, but she did extend a “change of control” clause meant to net Mozilla big bucks if Yahoo was purchased.

In a statement, a Mozilla spokesperson had the following to say:

Each of our search partnerships is the result of a competitive process reflective of the value that Firefox brings to the ecosystem. The Yahoo relationship is no different.

Mozilla’s main form of income (90 percent of its revenue) is search agreements, according to Recode. Google was paying it a guaranteed $300 million per year, but Mayer overcommitted in an effort to get Yahoo’s search profiled in Firefox.


Bad for Yahoo, great for Mozilla

This doesn’t mean Mozilla will necessarily opt-out and get paid big money, but it could. The report doesn’t list any criteria for what would qualify Mozilla cashing in, so it may be very loose.

But it also depends on why a buyer wants the company. The company’s deep patent portfolio is enticing, and likely being eyed by those not interested in search as much as core technology.

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But will a new owner want to pay a premium to acquire it? That could prevent a purchase from happening.

More to the point, the agreement leaves Mozilla free to double-dip; it can cash out on the deal and sign a new agreement with Google or another company (like Bing) immediately.

This, like so many of Mayer’s other bets, sounds like a lose-lose situation for Yahoo.


Photo by Titanas