Yahoo And Mozilla Sue Each Other Over Partnership Collapse

Yahoo and Mozilla have sued each other over the recent unraveling of what was supposed to be a five-year search partnership.

The original deal, which began in November of 2014, called for Yahoo to become the default search engine on the Firefox browser. Yahoo reportedly agreed to pay Mozilla $375 million a year for that status. Last month, Mozilla terminated that deal and made Google the default search engine in the U.S., Canada, Hong Kong and Taiwan.

Now, Yahoo and Mozilla have each filed complaints alleging that the other company violated the 2014 contract. The public version of Yahoo's complaint, filed Friday in Santa Clara County Superior Court, was largely blacked out -- presumably because the allegations include confidential contract terms.

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Mozilla counters in a complaint brought in the same court that the contract included a clause that allowed it to terminate the partnership. The company also says the original deal obligates Yahoo to continue to make annual payments to Mozilla, although Yahoo is no longer the default search engine.

"When it became clear that continuing to use Yahoo as our default search provider would have a negative impact on all of the above, we exercised our contractual right to terminate the agreement and entered into an agreement with another provider," Mozilla’s chief legal and business officer writes in a blog post.

Mozilla's legal complaint also contains blacked out passages, but the company makes several public allegations. Among others, Mozilla contends that Yahoo violated its contract by failing to improve its search engine.

By the middle of last year, only 23% of Firefox users kept Yahoo as the default search engine, Mozilla alleged. Prior to the 2014 deal, 90% of Firefox users stayed with the default search engine, according to Mozilla.

"Rather than focus on improving the quality of its search product, as Yahoo assured Mozilla it would prior to entering into the deal, Yahoo continually focused on short-term monetization and special events such as the Olympics and the election, at the expense of product quality," Mozilla alleges.

Mozilla also says that Yahoo wanted to use "alternative branding" in order to prevent consumers from switching to other search engines. "Because there was no improvement in the product quality, tests demonstrated that users continued to switch away from Yahoo Search, whether branded Yahoo or not," Mozilla alleges.

Mozilla adds that the partnership was placing its privacy-friendly reputation at risk, given that Yahoo was recently acquired by Verizon. "Verizon poses significant brand issues for Mozilla and its reputation for protecting user privacy," Mozilla alleges.

The browser developer notes that Verizon in 2014 agreed to pay $7.4 million to settle a privacy investigation by the Federal Communications Commission. "Verizon's policy positions are also diametrically opposed to Mozilla's positions on core issues such as net neutrality and cybersecurity," Mozilla states.

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