Recode has seen paperwork which indicates that Yahoo might have to pay Mozilla annual payments of $375 million through to 2019 if it does not think the buyer is one it wants to work with and walks away.
This was part of 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 in Firefox.
Mozilla switched to Yahoo from Google after Mayer offered a much more lucrative deal that included what potential buyers of Yahoo say is an unprecedented term to protect Mozilla in a change-of-control scenario.
At the time Mayer that would never thought would happen, but now her hand has been forced. 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.”
About 90 percent of Mozilla’s revenue was due to its Google deal which paid Mozilla an annual guarantee of $300 million.
Sources said Mayer thought she could make the Mozilla deal work better and had dreams of rolling out Yahoo search on Mozilla outside the US – which did not happen.
The deal was only marginally profitable for Yahoo after the payment is taken out.
Of course while Mozilla has the right to leave and collect its money, but it might not if it is satisfied with the buyer’s commitment to search.