Feeds

Mozilla millions still 86% Google cash

Mountain View sugar daddy tax audit rolls on

Bridging the IT gap between rising business demands and ageing tools

Google still provides 86 per cent of Mozilla's revenue, according to the open source outfit's latest financial statement.

On Thursday, Mozilla released its audited financial statement for 2009, and as in previous years, an unnamed search company is listed under "concentrations of risk." In 2008, Google accounted for 91 per cent of Mozilla's revenues, so the risk has dropped. But 86 is still a very large number.

"The Corporation has a contract with a search engine provider for royalties which expires November 2011," the statement says. "Approximately 86% and 91% of royalty revenue for 2009 and 2008, respectively, was derived from this contract."

The statement also says that the unnamed search-engine provider represented 71 per cent and 80 per cent of 2009 and 2009 receivables, respectively.

In 2009, Mozilla's total revenues totaled $104 million, a 34 per cent increase from 2008. With a blog post on its latest financial statement, the open sourcers say that a "majority of Mozilla revenue continues to be generated from the search functionality included in Mozilla's Firefox product from organizations such as Google, Yahoo, Yandex, Amazon, EBay and a handful of others." But a vast majority of that majority comes from Mountain View.

Traditionally, Mozilla prefers not to mention its Google dependence in its blog posts.

Thanks to this longstanding Google dependence, Mozilla is facing an IRS audit, and the open sourcers say they still don't know when this will be resolved. "As noted last year, the IRS has opened an audit of the Mozilla Foundation," the blog post reads. "We do not yet have a good feel for how long this process will take or the overall scope of what will be involved."

Since 2004, Mozilla has collected a portion of all Google search dollars generated by Firefox traffic. In the US and Western Europe, Google is the default home page — and the default option is the search box in the top right-hand corner of the browser. Mozilla now has deals with various other search engines, including — gasp! — Microsoft, and in some cases, Google is not the default. In Russia, for instance, Firefox defaults to the native Yandex. In China, it defaults to Baidu.

With tensions growing between the two organizations, Mozilla's dependence on Google is certainly a reason for concern. But in multiple conversations with The Reg, Mozilla has downplayed the risk, saying that if Google backs out, there's no shortage of others willing to take their place. Following Mozilla's deal with Microsoft, this doesn't ring as hollow as it used to.

Meanwhile, the pending IRS audit could threaten the tax-exempt status of the not-for-profit Mozilla Foundation. The Foundation received tax-exempt status in 2003, and in 2004, it did not pay taxes on $4,422,674 in search dollars (76 per cent of it revenue), saying that an arrangement with "a search provider...facilitates the dissemination of the Foundation's browser, thereby increasing the accessibility of the internet."

Then, in 2005, the Foundation spun off a for-profit operation, and it transferred multiple search-engine contracts to this Mozilla Corporation. That same year, the Foundation set aside a "tax reserve fund" in case the Internal Revenue Service reviewed the tax status of its 2004 and 2005 search-engine dollars.

In 2008, Mozilla announced that the IRS had indeed launched a review of those two years. Mozilla has argued that its 2004 and 2005 search revenues were royalties and should not be taxed, but it realizes that the IRS may not agree.

In early 2009, according to Mozilla's latest financial statement, the IRS expanded its investigation to the tax years 2006 and 2007. But it appears that these portions of the investigation have now been closed. "As of June 30, 2010, there are two remaining issues the IRS continues to challenge. These include the tax classification of the Foundation's 2004 and 2005 search related revenue and any potential impact on the Foundation's public support test calculation as a result of this classification," the statement reads.

In the past, Mozilla has also said that there has been an "inquiry regarding its tax exemption" because Google provides such a large portion of its revenue. "While the Foundation did not automatically qualify as a public charity with public support at 33 per cent of total support, it believes that it qualifies as a public charity under the facts and circumstances test with public support over 10 per cent," Mozilla says.

If it doesn't pass this test, the Foundation continues, it will become a private charity. And it will have to pay additional taxes. ®

Application security programs and practises

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.