Summary: The new owner of Yahoo is getting into a legal battle with Mozilla over a poorly made contract by former CEO Marissa Mayer.
The new owner of Yahoo, Oath, which happens to be owned by Verizon, is now fighting with Mozilla over a badly crafted search deal made by former Yahoo CEO Marissa Mayer. The legal battle picked up last week as Yahoo Holdings and Oath filed a complaint against Mozilla.
The lawsuit against Mozilla claims that they improperly terminated an agreement with Yahoo. Now Mozilla claims a breach of contract against Yahoo in a cross-complaint just filed.
In mid-November, Mozilla announced they would be returning to Google, their longtime search provider for U.S., Canada, Taiwan, and Hong Kong. Google has been Mozilla’s partner in other countries even though Mozilla has deals with Baidu in China and Yandex in Russia. They also announced a new browser, Firefox Quantum.
In response to the lawsuit by Oath, Mozilla stated: “We recently exercised our contractual right to terminate our agreement with Yahoo based on a number of factors including doing what’d best for our brand, our effort to provide quality web search, and the broader content experience for our users.”
Recode broke the news of the building battle in mid-2016. They reported that the contract terms stipulated that whichever company acquired Yahoo must pay Mozilla the annual payments of $375 million through the end of the contract in 2019. The buyer must do this even if they did not want to work with Mozilla. Mayer was the one who made the deal in late 2014 when Yahoo became the default search engine for Mozilla.
Mozilla had switched to Yahoo from Google when Mayer offered a beneficial deal that provided unparalleled terms protecting Mozilla in case there was a change-in-power at Yahoo. Mayer made the deal under the assumption that it would never happen. The agreement gave Mozilla the right to leave the partnership if, under their discretion and in a specific time period, they did not find the new owner acceptable. Even if Mozilla did leave and make another deal, Yahoo was still required to pay the annual revenue guarantee of $375 million.
Mozilla legal head Denelle Dixon continued, “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.”
The new owner of Yahoo has been a problem for Mozilla, who relies on a robust search partner for their business. They depend on the payments from Yahoo for being their default option for Firefox users. Recode explains that at one time, roughly 90 percent of Mozilla’s revenue was from its previous deal with Google, where they were receiving an annual guarantee of $300 million.
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To learn more about Yahoo’s recent problems, read these articles:
- Yahoo Hit with Another Gender Discrimination Lawsuit
- Lawsuit: Ex-Yahoo Employee Challenges Performance Review System
- Yahoo Secretly Scanned Email Accounts for the Government