Mozilla, the maker of Firefox, on Tuesday began cutting about 25% (250 people) of its global workforce, saying that the coronavirus pandemic’s impact on economies “significantly impacted our revenue.”
“Our pre-COVID plan is no longer workable,” Mitchell Baker, CEO of Mozilla Corp., the for-profit firm that manages Firefox, and the chairwoman of the Mozilla Foundation, wrote in an email to employees. “We have talked about the need for change — including the likelihood of layoffs — since the spring. Today these changes become real.”
The organization announced that it will also be going through a restructuring that will reduce some current efforts such as developer tools.
Mozilla’s 2018 financial statement showed a 20% decline in revenue and for the first time noted that expenses outweighed income.
Mozilla Corporation gets the vast majority of its revenue (which totaled $435.7 million in 2018) from search engines who pay to be the default search option in Firefox in different parts of the world, including Google, Yandex, and Baidu.
It seems as though Mozilla hasn’t been very transparent about why these royalties are being reduced and instead seem to be blaming it on the coronavirus.
Baker’s announcement and memo didn’t say exactly how the pandemic lowered revenue.
Yes, the coronavirus has impacted businesses all over the world, so not to downplay its effects, but there is a suspicion that the real issue is that Firefox’s market share is only a fraction of what it used to be and so the royalty funding is going to be much smaller.
Computerworld wrote yesterday that, with Firefox’s search deals, “a shrinking [browser market] share impacts finances. Even if the effects are not immediate and direct, then they’re likely to show up mid-term or when contracts come up for renewal.” A Mozilla financial statement says it has contracts with search engine providers that expire in November 2020.
But what has Mozilla been doing with all of the funding it has been receiving up until now?
According to their financial reports they’ve received more that enough money to set them selves up for success.
In fact they’ve received half a billion dollars per year for many, many years.
According to Cal Paterson, the real issue boils down to their overhead and ethics, among other things.
In a recent article, Cal Paterson states that “Mitchell Baker, Mozilla’s top executive, was paid $2.4m in 2018, a sum I personally think of as instant inter-generational wealth. Payments to Baker have more than doubled in the last five years.”
This chart from his recent blog post shows how Firefox’s market share has plummeted in recent years while their Chair’s pay skyrockets:
So if Firefox’s market share has been rapidly declining for several years now, why have their top execs salaries and bonuses been skyrocketing?
Mozilla can’t just continue as before.
At the very least they need to reduce their expenses to go along with their now reduced income.
That income is probably still pretty enormous though: likely hundreds of millions a year.
So what is going to happen to Mozilla now that they have just 4% market share, down from 30% a decade ago?
Mobile browsing numbers are even lower as Firefox barely even exists on phones.
This all comes as quite a frustration for Firefox users because as a browser, it is able to install extensions and can block ads, something that is rare.
Yet despite all of their problems in their core business, they still seem to be spending money on other project like mobile apps for making websites, an email relay service, a password manager, and oh – the $25 million they spent on buying the reading list management startup, Pocket.
Many of the projects mentioned above are now abandoned while Firefox hangs on by a thread.
It will be interesting to see what direction Mozilla takes next.