What Does Mozilla Do With Its Dough?

I went to a Microsoft event last night, and one of the things we talked about during drinks afterwards was what Mozilla does with all of the money it makes from driving search traffic to Google. The little search box in the upper right-hand side of Firefox is Mozilla’s cash-cow because Google pays Mozilla a referral fee when people use it.

And we’re not talking nickels and dimes. In 2006, the Mozilla Foundation made a $47-million profit on revenue of $66.8-million. That’s a sweet profit margin of 70.3%. (Here’s Mozilla’s 2006 financial statement)

So, what does Mozilla do with all this cash given it’s a non-profit organization in which a major chunk of its development efforts are fueled by the open source community?

The upside for Web users is that Mozilla isn’t sitting on its pile of cash. Instead, it’s got a growing number of interesting and possibly disruptive projects happening. This includes a new one called Ubiquity, a Firefox extension that gives Web users the ability to easily create all kinds of mash-ups.

Who knows whether Ubiquity will become ubiquitous but with more cash than it can apparently spend, Mozilla is becoming the Web’s Mad Scientist, working away on all kinds of new, wonderful and whacky experiments.

For more, check out TechCrunch and VentureBeat. As well, Mozilla’s Mitchell Baker wrote an extensive blog post last November that talks about Mozilla’s finances and strategic directions.

More: Here’s a video about Ubiquity from Mozilla’s Aza Raskin.

Even more: Microsoft released IE8 Beta 2 earlier today. After going to a presentation last night, my initial impression is that IE8 is playing catch-up to Firefox, even though IE still has about 70% of the browser market. The most obvious bow to Firefox is IE8’s introduction of add-ons.

Microsoft is also doing some interesting things with privacy, including a way to surf without leaving any tracks called InPrivate. I’m not sure InPrivate will resonate with users but it’s a nice feature if you want to wave the privacy flag.

Putting aside the new features, the more important development is Microsoft’s willingness to focus on innovation as a way to defuse Firefox’s momentum. This can only be a good thing for the Web, Web users and other browser makers if you believe in the idea that healthy competition is a positive thing.

And even more: Mozilla has extended its deal with Google for another three years. In 2006, Google accounted for $57-million, or 85%, of Mozilla’s revenue.

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