Yahoo Parent Filed a Complaint against Mozilla for breach of contract

Yahoo Parent Filed a Complaint against Mozilla for breach of contract

In that deal, Mozilla retained the right to walk away and still collect hundreds of millions of dollars a year - if Yahoo was acquired by a new company. This is why the current dispute between Mozilla and Yahoo has led to legal action on both ends.

The Yahoo-Mozilla scuffle can be traced back to 2014, when Mayer herself struck a lucrative deal to make Yahoo the default search engine on the Mozilla Firefox browser, replacing Google; the deal included a clause to protect Mozilla in what Mayer evidently thought was an improbable change-of-control scenario. As the news of takeover emerged into the market, the agreement between Yahoo and Mozilla explicitly stated that the acquiring company would pay Mozilla $375 million per year through 2019 if Mozilla wasn't satisfied with the new owners of Yahoo. Mayer was presumably under the impression it would never actually come to fruition, but Yahoo was this year bought under the Oath umbrella, and here we are. The lawsuit focuses on Yahoo Holding and Oath which was based on Mozilla's agreement with the search engine for putting the default search browser in their web browsers.

The contract, however, was very much skewed in Mozilla's favor.

On December 1, Yahoo fired the first shot filing a complaint that alleges Mozilla breached a contract that existed between the two companies by terminating the arrangement early.

Mozilla terminated the agreement that it had in place with Yahoo in early November, with Yahoo having allegedly ceased payments after the end of October. (In response, Mayer's legal team agreed to have her testify before the Senate Commerce Committee-an outcome Mayer had initially resisted-and reportedly requested that lawmakers withdraw the subpoena in order for her testimony to "appear voluntary.") Now, her specter is reportedly haunting the remains of a deal between Yahoo's new owner, Oath, and Mozilla, inciting a legal battle.

The counter-claim also suggested that the allegedly missing payments have kicked a hole in Mozilla's budget.


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", the company explained in a blog post yesterday.

Dixon added that the terms of Mozilla's agreement with Yahoo clearly spell out its post-termination rights.

Damage to its brand could be a key defence. Mozilla additionally changed defaults for other countries as well. And virtually no one believes Yahoo is superior to Google. On December 5, Mozilla filed a cross-complaint seeking to ensure that our rights under our contract with Yahoo are enforced. In addition, $375 million is a massive amount of money, even for Verizon's stature. It's unsurprising that Oath would fight this tooth-and-nail.

So it seems Mozilla can switch search partners and still expect revenue.

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