Mozilla creates money-making subsidiary

The Mozilla Foundation, which distributes the open source Firefox Web browser, Wednesday announced it has created a corporate subsidiary to support its money-making activities and help widen the use of its products.

While the goals of the subsidiary, called Mozilla Corp. , include generating revenue and profit, its primary interest is not in making money, the group said. Instead, its main objective is to sustain the development of Firefox and other products, and help the foundation promote its goal of driving open standards on the Web, it said.

“The Mozilla Corporation is not a typical commercial entity. Rather, it is dedicated to the public benefit goal at the heart of the Mozilla project, which is to keep the Internet open and available to everyone," Mitchell Baker, a former Netscape attorney who becomes president of Mozilla Corp., said in a statement.

Mozilla products such as Firefox and its Thunderbird e-mail client will remain free and open source, the group said.

The Mozilla Foundation was formed about two years ago, primarily through $2 million in funding from the former AOL. Its Firefox browser has garnered close to 10% of the browser market, according to analyst estimates, presenting a challenge to Microsoft's dominant Internet Explorer software. Firefox has been dowloaded more than 75 million times, according to the Foundation.

The wide adoption has created "unintended but real" economic value from Firefox, the group said. Firefox generates most of its money through a tool that lets users search the Web with various search engines, and also search for products at Amazon and eBay. Firefox takes a small share of revenue through contracts with those partners.

The corporation was created because, as a tax-paying entity, it is easier for it to manage such business contracts, said Tristan Nitot, a spokesman for Mozilla in Europe who served on an advisory committee for the reorganization. "This is not a drastic change," he said. "It makes more sense to have a commercial entity doing this rather than a public foundation."

The corporation does not plan to do an IPO and its only shareholder will be Mozilla Foundation, Nitot said.

"It's not the case that someone is taking Firefox and making a lot of money," he said. "The revenue we have made is almost accidental, it was not initially expected but it happened, so we needed to evolve the legal structure and fiscal structure to reflect this."

The Mozilla Foundation will remain "the nucleus" of the organization, responsible for overseeing projects, distributing source code and managing relationships between contributors. The corporation will focus on marketing, sponsorships and "a range of distribution-related activities."

Most of the 40 or so people who worked for the Mozilla Foundation will become employees at the corporation; the foundation will be left with just three staff. The volunteers and commercial groups that contribute to the project will not see any change in the way Mozilla code is developed, according to the group.

The IDG News Service is a Network World affiliate.