What Mozilla is doing with its big pile of new money (Q&A)

Mozilla has embarked on an expensive new effort to build an entirely new mobile operating system, Firefox OS, despite the dominance of Apple's iOS and Google's Android. It's a good thing Mozilla's got piles of new money on hand.

On Thursday, the nonprofit organization revealed a big upward jump in financial results for 2012, information it discloses to tax authorities. Its revenue increased from $163 million in 2011 to $311 million in 2012, and its net cash from operations increased from $13.4 million to $70.3 million.

Mozilla's money comes chiefly from driving search traffic to partners such as Google that return a portion of the resulting advertising revenue. So why the big increase? Mostly because Mozilla renegotiated its Google deal with more favorable terms, said Mitchell Baker, Mozilla's executive chair and "chief lizard wrangler." About 90 percent of Mozilla's revenue comes from Google, she said.

Baker addressed Mozilla's money, its mobile effort, and more in an interview with CNET's Stephen Shankland. Here's an edited transcript of the conversation.

Stephen Shankland: Why the big increase in revenue for 2012?
Mitchell Baker: It was the renegotiation of our arrangement with Google. We renew it regularly, but it had been a while since we looked at the calculation of it together with them.

To what extent is your revenue increasing because you're driving more traffic, too?
Because of the agreement with Google, that's not something we can say too much about.

What's the biggest difference for Mozilla now vs. a year ago? I'm thinking it's that Firefox OS has moved from a development project to the real-world market.
The biggest thing that is different is we now have phones in the market. The partnerships we talked about with the network operators and handset manufacturers are different, because we have joint products in the market. Our interactions and relationships with partners are becoming public. What comes out of the relationship is more visible. Our launch teams are a combination of the operating company in that country, Mozilla, and also our volunteer communities. We're trying to expand our activities in a Mozilla way.

There was some skepticism: could Mozilla work with big companies? We have in the past, but it wasn't obvious or it's been awhile. Will we be like every other software company out there and not look like Mozilla anymore? We've put that to rest.

You also have Firefox for Android, and we've just seen the first deals to preinstall Firefox on mobile devices. Are you looking to spend more money to increase the usage of Firefox this way? Were those first deals opportunistic or the first part of a larger program?
It's hard to say.

We tried to do that in early days of Mozilla as the Microsoft alternative. Historically, it was very, very hard even with desktop browsers to get anybody to ship it -- even after the first Microsoft settlement with the Justice Department [over antitrust issues involving the bundling of Internet Explorer with Windows]. It's something we always thought about. It's often competitive. For PC manufacturers, that was also a payment business, and it was increasingly complex how payments worked.

Yes, I remember when AOL bought Netscape but continued to ship Internet Explorer on all those CDs.
Exactly. It's not so new.

There are a lot of browser market share numbers out there. How much do you gear your priorities around share of usage?
We pay attention to share numbers because it reflects the quality of the user experience, it validates that what we're doing is right, and it allows us to move the Web forward.

We invest heavily on Firefox on the desktop. We have a user base we want to keep happy. We've improved our product on the desktop and Android pretty dramatically over the last year or year-and-a-half. Firefox on Android is the highest-rated browser out there.

I agree.
When Chrome launched, it was not a high point for Firefox. There's no secret about that. We have improved that product dramatically. When people look at it or compare it with Chrome, if you can start from zero today, Firefox comes out looking really well.

Chrome is increasingly integrated into Google stuff. Are there other services or facilities we should offer with the browser? We don't have to make an integrated stack as Google products are becoming, but we continue to look at good leverage.

Are you now over the indigestion caused by Firefox's shift to the rapid release cycle, where updates arrive every six weeks? They're now mostly silent, so they're not so intrusive.
The rapid release philosophy has been adopted. But it doesn't matter what you do -- there's always some subset of people who are unhappy.

Is the Firefox community comfortable with it, by and large? Yes, especially now that it works quietly most of the time. And now we have a process for [slower-moving] enterprises. That makes things easier. The rapid release cycle is much more Web-like: incremental improvements over time rather than a big thing.

Well, you do have one big thing coming, the Australis overhaul to the user interface. Most people don't notice when a browser ships a new Web standard for something like Web audio, but they notice user-interface changes.
We're expecting people will notice. We expect a big chunk if not the vast majority of people to end up much happier with it. We expect some surprise and to have some questions, and we expect the people who don't like it will be very loud and vocal, which is often true of UI changes.

You need to be prepared for it. We are working to make sure we hear it, evaluate people who are loud, and find out what size that group is actually. And we have a set of things in mind to help our user base understand what's coming.

Right now phones and tablets are very different from PCs when it comes to software development, sales, distribution. When will the mobile and PC markets converge? Five years? Ten years? I'm curious to hear your perspective as someone whose products have to span both markets.
We carry around computers in our pockets. Many people barely use them as phones. We use them as computers. If you think about the future, when you're traveling around, it's great to have a lightweight, small form factor. It's sometimes useful that form factor pushes apps into being very minimalist. But that's not all of life. Big screens have a value to us. You want your computing environment to have good input devices, too.

Will those markets merge into closed, integrated silos like Google or Apple, or merge into something more open like the Web? That's an open question.

Part of the reason for the Firefox OS push is so Mozilla could encourage the open environment of the Web rather than the walled gardens of the mobile market. Do see any evidence you've pushed Google, Apple, or Microsoft in that direction?
One thing that has shifted is the ability to access the abilities of the phone using Web apps. The new mobile computing environment is accessible and controllable from the Web. That is utterly Mozilla. Others are participating, but that work is driven by Mozilla. For example, with geolocation [a standard that lets software query a phone or computer about where the user is located] -- we stood up against a mobile geolocation interface. We should just have a geolocation API, and if you want to use on mobile, great.

But have you seen change at the incumbent players in the mobile market?
We are starting to have an impact. If you listen to comments from Google, I think they like the technology and flexibility of the Web.

The Do Not Track standard [to let people tell advertisers and Web sites not to track them and their behavior] has struggled, though I don't know if I'd say it's dead in the water as some believe. What are you doing to make it relevant and make it real?
We're not as sure as the rest of the world that it's actually dead yet. It's one of those things. It's such a complex topic with so many players.

Do Not Track an expression of interest stating, "I don't want to be tracked." That gets into the whole ad industry, where we're in a period of pretty high innovation right now with things like the Google AdID proposal. We expected it to be a process that takes a good while. We didn't expect instant success. We're more optimistic than many that Do Not Track will bring value to users.

What happens if all the advertisers pick up and leave the standard creation process, as some already have done?
If they leave and stay left, then Do Not Track isn't operational. I don't think we're there yet.

Can you go nuclear and do something like use Adblock Plus [an ad-blocking browser add-on]?
We're trying to provide alternatives where all parties are engaged. It's a direct relationship with the ad industry. Adblock Plus is not.

The NSA surveillance revelations have shaken the computing industry, and Mozilla cares about privacy. Are you doing something in response to all the surveillance?
We've been pretty active in the policy side of the response, for example with Stop Watching Us and involvement in the legislative process. We've been more active than Mozilla used to be in policy matters. We do care about control and privacy. It's one of the reasons we are so focused on having our systems be open source, so you or someone technically savvy you know can verify what the software is doing. You are welcome to open it up and see what it does. We continue to be highly invested in open-source software and in community engagement.