In 2014, Mozilla and Yahoo came to an agreement that would see Yahoo serve as the default search engine in Firefox for the next five years till the end of 2019. Now Mozilla claims a breach of contract against Yahoo in a cross-complaint just filed.
"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 case was filed by Verizon in the Court of California on 1st of December. Yahoo is now part of Verizon's Oath, which also includes AOL and is helmed by Tim Armstrong. And Oath is accusing Mozilla of violating terms of the agreement, which forms the basis of its legal complaint against the browser. Attorneys representing Mozilla also did not respond to inquiries. Filed yesterday, Mozilla's countersuit in turn seeks "general, specific, and compensatory damages".
It is now left to the courts to decide if Yahoo should still be paying Mozilla $300 million a year even though Yahoo has ceased to be the default search engine on Firefox.
Yahoo as a search engine has been facing tough competition from the search engine giant Google. Web browsers, where most Internet users start their online visits, are a lucrative source of search traffic against which companies like Yahoo and Google sell ads. Mozilla was given a contractual right to terminate the agreement, if Yahoo was found unacceptable for some reason. As early as January 2015, Mozilla began discussions with Yahoo on the shortcomings of the quality of the search product. But at the same time, what has to be considered is that while Mozilla's Firefox has a market share of 13 per cent, at the same time, Google's Chrome has a market share of close to 60 per cent.
"The payments owed by Yahoo are key to financing Mozilla's efforts to launch the new version of its flagship product, Firefox", the complaint says. Or maybe Mozilla would never need to look anywhere else as long as Yahoo was on-board.
After Verizon purchased Yahoo's Internet properties, including its search technology, Mozilla was dissatisfied with its commitment to improving search. Russian Federation and other nearby territories now default to Yandex and in China, it has switched to Baidu.
"Yahoo Acquirer's response to Mozilla's concerns was in stark contrast to Yahoo's assurances from CEO Mayer at the time the Strategic Agreement was entered into", the counter-claim stated.
In mid-November, Mozilla announced they would be returning to Google, their longtime search provider for U.S., Canada, Taiwan, and Hong Kong.
Details of the deal were only made public past year, as CEO Marissa Mayer's time at the company came under the microscope while it prepared to sell itself to Verizon.
Yahoo said in its lawsuit that it "has suffered and will continue to suffer competitive injury to its business and reputation, among other harm, and Mozilla's material breaches and bad-faith conduct are a substantial factor in causing such harm".
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