Why Google paid $1 Billion for three years to Firefox

Kara Swisher: Google Will Pay Mozilla Almost $300M Per Year in Search Deal, Besting Microsoft and Yahoo

Google saw 11.7 Billion searches according to the November 2011 comScore Explicit Core Search Query Report. Firefox has 25% browser marketshare. If we assume that all 100% of Firefox users have Google set as the default search engine, that means 2.875 Billion searches on Google are coming from Firefox.

Revenue per search for Google was around $36.5 per 1000 searches in 2010 (http://www.thestreet.com/story/10839436/google-higher-search-market-share-expected.html). Assuming the same number for now and doing simple maths - for 2.875 Billion searches, it comes to 104.9 Million per month. So for the year, they are making $1.2 billion per year. $300 million as Traffic Acquisition Cost to Firefox is 25%, which is very low number when compared with large publishing partners or content networks.

I don't doubt the statement by Google Chrome Developer, Peter Kasting that Firefox is a partner. Both are making money, one more than other.