Firefox Dev Mozilla Announces Massive Layoffs, Ironically Needs Google To Stop The Carnage
Fast forward to the present day, roughly 7 months after the first public release of Chromium Edge, and Firefox is in a precarious position. Firefox has long been in [a distant] second place to Google Chrome, but Microsoft Edge has now slipped into the second place slot as Firefox's share of the desktop browser market continues to slide. Neither browser comes close to approaching the commanding lead of Google Chrome, but Edge's second-place showing represents a psychological victory for Microsoft.
Mozilla Lays Off Nearly A Quarter Of Its Workforce
Which brings us to another gut punch for Mozilla this week. The company had to make the unfortunate decision to lay off 250 employees in an effort to get its finances in order. The layoffs represent roughly one quarter of its entire workforce (Mozilla says that affected personnel will get severance pay through the end of the year along with H1 2020 bonuses). It's an unsettling turn of events for a company that started off 2020 with high hopes and aspirations for its most well-known product, Firefox, and newly developed products like its VPN.
However, like many companies around the globe from many diverse industries, COVID-19 came in like a wrecking ball during Q1 2020 and completely disrupted the game plan. "We started with immediate cost-saving measures such as pausing our hiring, reducing our wellness stipend and cancelling our All-Hands," said Mozilla Corporation CEO and Mozilla Foundation Chairwoman Mitchell Baker.
"But COVID-19 has accelerated the need and magnified the depth for these changes. Our pre-COVID plan is no longer workable."
Mozilla’s Game Plan For Righting The Ship
Losing a quarter of your staff would be rough for any company, but for Mozilla, its breadwinning product is currently facing a losing battle against two juggernauts in the tech industry with very deep pockets: Google and Microsoft. Still, Baker says that the company is poised to "put a crisper focus on new product development" going forward. While such actions would seem like a given in this climate, Mozilla says that it will prioritize its energy on "core browser growth" for Firefox through "differentiated user experiences" compared to the competition.
But with a reduction in workforce, Mozilla will have to put its developer tools, internal tooling and most critically, platform feature development on the back burner. Mozilla also announced that its other-than-Firefox products will be ramped up, including offerings that we've previously talked about like Pocket and its standalone VPN. The main reason for focusing on these new areas is to "develop new revenue streams" that are critical to the financial wellbeing of the company.
"Recognizing that the old model where everything was free has consequences, means we must explore a range of different business opportunities and alternate value exchanges," Baker added. "We must learn and expand different ways to support ourselves and build a business that isn't what we see today."
Putting All Of Your Eggs In One Basket Was Never A Good Idea For Mozilla
While Mozilla is taking drastic steps to address its financial bleeding, the company’s worst fears are truly coming to fruition. Google and Microsoft are pushing Firefox into irrelevancy in the Windows desktop browser market. And when it comes to the massive reach of smartphones, Firefox is even more at a disadvantage as Google Chrome and Apple Safari have run away from the rest of the field, leaving Firefox with a sub-1% share of the market.
Mozilla’s situation is even more precarious when you consider that 91 percent of Mozilla's revenue in 2018 came from royalties, which basically amounts to the money that it gets to make Google the default search engine in Firefox. In 2018, of the $451 million that Mozilla penciled in for revenue, a whopping $430 million (91 percent) came from Google. That's absolutely astounding that Mozilla's financial health is beholden to its primary competitor.
Google could at any moment cut Mozilla off, as Firefox's share of the desktop browser market likely isn't enough to do serious damage to its bottom line. But it could certainly be a death blow to Mozilla as a company. With that in mind, Mozilla's current search deal with Google ends in November and has not at this time been renegotiated.
"In 2020, it’s hard to see anyone offering Mozilla a lifeboat if Google decided a new search deal wasn’t in its best interests, or that it wasn’t willing to pay anywhere near the rates it offered to win Firefox back in 2017," writes Barry Collins of The Startup. "That leaves Mozilla in a woeful bargaining position."
Needless to say, the closing months of 2020 will be critical for Mozilla as it attempts to regain its balance and plot a course forward with new money-making projects after losing a huge chunk of its workforce. We hope for Mozilla’s sake that it’s able to come to a new search agreement with Google to secure a much-need cash infusion to keep its operations running. However, relying on an reluctant benefactor for 90 percent of your income is not a tenable solution long-term – especially now that Google has Microsoft as its co-pilot with Chromium.