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Through Her Terrible Deal With Mozilla, Marissa Mayer Proves That Search Can Still Turn A Profit

Yahoo's buyer will likely have to pay Mozilla more than $1B because Marissa Mayer thought Yahoo was a search engine.

With final bids due next week on the purple-hued tire fire that is Yahoo, potential buyers are learning about another bizarre and potentially costly deal struck by Marissa Mayer during her tenure as CEO.


According to Kara Swisher over at Recode, "Evita Breadsticks" made a deal with Mozilla back in 2014 that appears to be transcendently lacking in both foresight and logic.

Under terms of a contract that has been seen by Recode, whoever acquires Yahoo might have to pay Mozilla annual payments of $375 million through 2019 if it does not think the buyer is one it wants to work with and walks away.
That’s according to a clause in the Silicon Valley giant’s official agreement with the browser maker that CEO Marissa Mayer struck in late 2014 to become the default search engine on the well-known Firefox browser in the U.S.

Basically, Marissa outbid Google on a contract that Yahoo maybe shouldn't have even gone after considering it had pivoted away from search before Marissa came aboard, and was chock full of terms predicated on the notion that Yahoo would never sell itself.


Now, with Yahoo basically still a speck in Google's rearview on the search engine highway and up for sale in the most desperate of circumstances, Mayer's Mozilla deal looks spectacularly bad for an even more amazing reason. But don't take just our word for it:

According to the change-of-control term, 9.1 in the agreement, Mozilla has the right to leave the partnership if — under its sole discretion and in a certain time period — it did not deem the new partner acceptable. And if it did that, even if it struck another search deal, Yahoo is still obligated to pay out annual revenue guarantees of $375 million.

That's right, Mozilla can essentially back out of this thing if it doesn't feel Verizon or TPG or Warren Buffett/Dan Gilbert are going to make search a major priority for the New Yahoo.

Who owns Yahoo would indeed be a big concern for Mozilla, whose business depends on a robust search partner and the payments it gets from them for making it the default option for users of Firefox. About 90 percent of its revenue was due to its Google deal, for example, which paid Mozilla an annual guarantee of $300 million.

Spoiler Alert: Ain't no one buying Yahoo going to make search a priority.

So what Mayer is left to explain is why companies are bidding in the rumored range of $4 billion to acquire a former search giant that is no longer a search giant. Based on that, one would thinks that Yahoo's remaining suitors are going to maybe cut back on those final bids, and that's not even taking into account Marissa's moves on Yahoo Japan, Alibaba, patents or whatever else hasn't come out yet.

Once again, we ask the question; Marissa Mayer is begrudgingly selling Yahoo, but what is Yahoo?

Under Mayer deal, Mozilla could walk away and still get more than $1 billion if it doesn’t like Yahoo’s buyer [re /code]


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