Earlier this week, Google and Mozilla said they had struck a deal to renew their search royalty agreement for another three years.
What the pair declined to add: The search giant will pay just under $300 million per year to be the default choice in Mozilla’s Firefox browser, a huge jump from its previous arrangement, due to competing interest from both Yahoo and Microsoft.
Sources said this total amount — just under $1 billion — was the minimum revenue guarantee for delivering search queries garnered from consumers using Firefox.
We expect our cost of revenues will increase in dollars and may increase as a percentage of revenues in future periods, primarily as a result of forecasted increases in traffic acquisition costs, data center costs, credit card and other transaction fees, content acquisition costs, and other costs. In particular, traffic acquisition costs as a percentage of advertising revenues may increase in the future if we are unable to continue to improve the monetization or generation of revenues from traffic on our websites and our Google Network members’ websites.
Ah, $300M TAC to Firefox retains the 25% browser market share for Google but it also shows that Google is finding it tough to monetize its traffic. Could Bing be the reason for such high TAC? Time will tell.