Yahoo and the maker of the Firefox web browser are embroiled in a legal fight over a deal that made Yahoo the default search engine for Firefox users in the US.
Yahoo and Mozilla, the maker of the Firefox web browser, are embroiled in a legal fight over a 2014 deal that made Yahoo the default search engine for Firefox users in the US.
The search partnership, which was worth hundreds of millions of dollars a year and was supposed to run through 2019, was one of the biggest deals struck by former Yahoo CEO Marissa Mayer and raised hopes that the pioneering web portal might be able to revive its business.
But Yahoo has since been acquired by Verizon. And in the eyes of Mozilla, that was grounds to terminate the agreement. Mozilla dumped Yahoo as the default search engine in its new Firefox brower in November, replacing it with Google.
Now, both companies are suing each other.
"We recently exercised our contractual right to terminate our agreement with Yahoo based on a number of factors including doing what’s best for our brand, our effort to provide quality web search, and the broader content experience for our users," Mozilla wrote in a blog post on Tuesday evening.
Mozilla said that Yahoo and Oath, the name of the Verizon subsidiary that Yahoo now operates under, sued Mozilla on December 1 on the grounds that it improperly terminated the agreement. Mozilla hit back on December 5 with a cross-complaint arguing that it was protecting its rights to enforce the contract.
In its lawsuit, Mozilla also alleged that Yahoo never delivered on its promise to invest and continue to improve its search engine.
"As a result, it was one of the significant factors that contributed to the decline in Firefox usage. Mozilla's revenue from Yahoo never met expectations," Mozilla wrote.
Although Yahoo and Mozilla have never disclosed the financial terms of the search agreement, Recode has reported that the deal requires Yahoo to pay Mozilla $375 million a year.
Mozilla claims in its lawsuit that Yahoo has stopped making its payments.
The dispute is the latest setback to threaten Mayer's legacy at Yahoo. Over the past year, Yahoo has gradually revealed details of a massive hack of its systems, which Yahoo now says affected all 3 billion of its users.
Mayer left Yahoo in June when Verizon closed its $4.48 billion acquisition of the company. Yahoo is now part of Verizon's Oath, which also includes AOL and is helmed by Tim Armstrong.
Here is Mozilla's full blog post:
Yahoo Holdings and Oath filed a complaintagainst Mozilla on December 1, 2017, claiming that we improperly terminated the agreement between Mozilla and Yahoo. Today, in response, Mozilla filed a cross-complaint against Yahoo Holdings and Oath for breach of contract.
While this is a legal matter and much of it is confidential, as Mozilla, we want to share as much information as we can in the spirit of our values of openness and transparency.
We will create a wiki page with links to relevant public court documents – over time we expect to add more content as it becomes public.
Our official statement on this matter is:
“On December 1, Yahoo Holdings and Oath filed a legal complaint against Mozilla in Santa Clara County court claiming that we improperly terminated our agreement. On December 5, Mozilla filed a cross-complaint seeking to ensure that our rights under our contract with Yahoo are enforced.
We recently exercised our contractual right to terminate our agreement with Yahoo based on a number of factors including doing what’s best for our brand, our effort to provide quality web search, and the broader content experience for our users.
Immediately following Yahoo’s acquisition, we undertook a lengthy, multi-month process to seek assurances from Yahoo and its acquirers with respect to those factors. When it became clear that continuing to use Yahoo as our default search provider would have a negative impact on all of the above, we exercised our contractual right to terminate the agreement and entered into an agreement with another provider.
The terms of our contract are clear and our post-termination rights under our contract with Yahoo should continue to be enforced. We enter into all of our relationships with a shared goal to deliver a great user experience and further the web as an open platform. No relationship should end this way – litigation doesn’t further any goals for the ecosystem. Still, we are proud of how we conducted our business and product work throughout the relationship, how we handled the termination of the agreement, and we are confident in our legal positions.
We remain focused on the recent launch of Firefox Quantum and our commitment to protecting the internet as a global public resource, especially at a time when user rights like net neutrality and privacy are under attack.”