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Mozilla: Rising revenue, but rising challenges

Firefox maker's 2010 revenue increases 18 percent to $123 million, mostly from a Google search-ad partnership, but the organization faces strong competition.

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Not bad for a nonprofit.

The Mozilla Foundation, the developer of the Firefox Web browser and an organization charged with defending openness on the Web, plans to report today that its revenue increased 18 percent from $104 million in 2009 to $123 million in 2010.

Expenses rose, too, though--from $61 million to $87 million--and Mozilla generated less net cash, down from $26 million to $22 million, according to Mozilla's tax filings. But hey, in case you missed it--Mozilla measures its success by improving the Web, not amassing a pile of cash.

Mozilla, with help from Opera Software's Opera browser and later Apple's Safari, slowly chipped away at the dominance of Internet Explorer, and Microsoft now has gone whole hog for developing a modern, high-performance browser. The Web standards Mozilla long advocated are now ascendant, though not without a lot of chaos as they're developed. Yet Mozilla in a way faces more challenges now that many of its ideals have prevailed.

That's because browsers are more competitive than ever--and the rising use of Safari and Chrome, along with IE's starring role in Windows 8, mean browsers from commercial interests are waxing in influence.

Mozilla argues that Firefox remains relevant, though. "Mozilla is unique in that we build Firefox to provide an independent offering focused solely on individual experience and the overall good of the Web," the company said in its annual report. As evidence, it pointed to work to speed Web development by speeding Firefox development; work on the do-not-track technology to let people evade behavioral ad targeting; the release of Firefox for Android; the development of Browser ID to try to reform Web site authentication; and working on the "Boot to Gecko" project for a Web-app operating system alternative to iOS or Android.

Mozilla discloses information available in its tax filings annually, but well after the tax year is over. In 2011, Mozilla has had a fresh series of challenges, perhaps most notably the steady rise in usage of Chrome as Firefox usage--as a percentage, not absolute terms--stayed level. Mozilla is still used by millions, but the more users it has, the more effective a tool it can be for reforming the Web. And though money isn't as central to Mozilla's operations as it is at a for-profit company, having money definitely helps Mozilla pursue its mission.

Most of Mozilla's revenue came through revenue from search engines, chiefly Google but also Bing, Yahoo, Yandex, Amazon, and eBay. The Google contract is up for renewal in November, but Mozilla isn't worried: "We have every confidence that search partnerships will remain a solid generator of revenue for Mozilla for the foreseeable future," the organization said in its FAQ.

People like to fret about whether Google, which now has its own browser to promote, will cut Firefox off. But I'd be surprised. First, Firefox could direct its traffic from its search box elsewhere by default--hardly the sort of thing Google could be expected to welcome.

Second, Google's mission with Chrome is not dominance of the browser market, it's enabling the new era of Web apps and services that are where Google makes its real money. Sure, if more people searched directly with Chrome, Google wouldn't have to hand over as much shared revenue to search partners such as Mozilla. But it's hard to see how cutting off Mozilla's search deal would result in people shifting to Chrome. Worse, it's the kind of move that would be perceived as very hostile in Web-developer circles.

Search isn't the sole source of Mozilla's revenue. It also got money from "very important individual and corporate donations and grants" and from investments, the organization said.

It's working on diversifying its revenue sources, though.

"We currently have several key business partnerships and are actively exploring search partnership opportunities and other potential revenue opportunities," Mozilla said.

In another financial matter, Mozilla said it had cleared a hurdle in an ongoing Internal Revenue Service investigation about tax matters for the years 2004 through 2007.