Firefox opts for Google as default search in U.S., surprising Yahoo

SAN FRANCISCO (Reuters) - Alphabet Inc’s (GOOGL.O) Google reclaimed on Tuesday its spot as the default search engine on Mozilla Corp’s Firefox Internet browser in the United States and other regions as the browser maker stunned Verizon Communication Inc’s (VZ.N) Yahoo by canceling their deal.

Google confirmed the move but declined, along with Mozilla, to disclose revenue-sharing terms of the multiyear agreement. Google’s growing spending to be the primary search provider on apps and devices such as Apple Inc’s (AAPL.O) iPhone has been a major investor concern.

Google will be Firefox’s default search provider on desktop and mobile in the United States, Canada, Hong Kong and Taiwan, said Mozilla spokewoman Erica Jostedt.

Yahoo had been the default in the United States, Hong Kong and Taiwan. Firefox did not have an official partner in Canada.

Verizon said Mozilla terminating the Yahoo agreement caught it off guard.

“We are surprised that Mozilla has decided to take another path, and we are in discussions with them regarding the terms of our agreement,” said Charles Stewart, a spokesman for Verizon’s Oath unit, which oversees Yahoo.

For a decade until 2014, Google had been Firefox’s worldwide search provider. Google then remained the default in Europe while regional rivals such as Yahoo, Russia’s Yandex (YNDX.O) and China’s Baidu Inc (BIDU.O) replaced it elsewhere.

Former Yahoo Chief Executive Marissa Mayer won a five-year contract with Mozilla in 2014 when Firefox and Google's Chrome browser were battling for users. (reut.rs/2hsYZQo)

Chrome’s U.S. market share has since doubled to about 60 percent, according to data from analytics provider StatCounter, with Mozilla, Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) browsers capturing the rest.

Yahoo paid Mozilla $375 million in 2015 and said that it would pay at least the same amount annually through 2019, according to regulatory filings.

Denelle Dixon, Mozilla’s chief business and legal officer, said in a statement that the company had “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.”

She continued, “We believe there are opportunities to work with Oath and Verizon outside of search.”

Yahoo and Google aim to recoup placement fees by selling ads alongside search results and collecting valuable user data. Google said in October that contract changes drove a 54 percent increase in such fees to $2.4 billion in the third quarter.