Mozilla's Google dependence draws tax inquiry

 

Gallery

Posted on 20 Nov 2008 at 09:07

Mozilla has revealed that 88% of its revenues in 2007 came from Google, a dependence which has prompted the US Internal Revenue Service to investigate its non-profit status.

The open-source software company behind the popular Firefox browser has finally revealed its financial statements for 2007, and the organisation is in rude health.

It made $75 million for the year, a 12% increase over 2006, though $66 million of that came via Mountain View, a 3% increase on 2006.

Mozilla has a search deal in place with Google that sees Firefox users punted to a default start page with a Google search box. The deal was recently renewed until 2011, calming concerns that the launch of Google's competing browser, Chrome, might throw a spanner into the works.

However, not all is rosy in Mozilla world. The IRS is investigating the tax-exempt status of Google's contribution to Mozilla, though Mozilla Foundation chairperson Mitchell Baker says the organisation has prepared for this eventuality.

"In 2005 the Mozilla Foundation established a tax reserve fund for a portion of the revenue the foundation received that year from Google. We did this in case the IRS decided to review the tax status of these funds. This turns out to have been beneficial, as the IRS has decided to review this issue and the Mozilla Foundation.

"We are early in the process and do not yet have a good feel for how long this will take or the overall scope of what will be involved."

The company says it uses the funds to support its 150 employees and infrastructure. It has also handed out around $1 million in grants to projects including the Gnome desktop and Creative Commons.

However speaking on his blog, Mozilla's open-source evangelist Christopher Blizzard claims the continued success of Mozilla has other benefits: "We use the funds that we gather to grow both the user base (which helps us drive our mission) but also to enable and grow a community that also shares the same values that we do.

"Much of that effect can be felt in direct market share numbers-people directly using Firefox. But Mitchell's post also mentions something else as well. That releases by other market players who have to compete with us also help us meet our mission in keeping the Internet alive and vibrant."

Author: Stuart Turton