Mozilla interim CEO Mitchell Baker announced a round of layoffs at the software company, citing the need to “innovate in the areas most likely to impact the state of the internet and internet life.”
TechCrunch originally reported the story, with news that some 70 employees were impacted. This is a relatively high number for a corporation that only employees around 1,000 people, and Baker indicated there may be more yet to come.
The vast majority of Mozilla’s income is derived from search royalties. Search engines, such as Google, pay Mozilla a portion of advertising income when a user searches using the built-in search bar. For several years Yahoo was Mozilla’s default search engine, and a large source of their revenue, until Mozilla cancelled the agreement in 2017. Now, much of Mozilla’s revenue comes from Google, the maker of Chrome. This puts the software company in the awkward—and potentially dangerous—position of relying on its prime competitor as the primary source of its income. As a result, Mozilla has been working on efforts to diversify its income streams for some time. Unfortunately, those appear to be taking longer to pay off than anticipated.
“You may recall that we expected to be earning revenue in 2019 and 2020 from new subscription products as well as higher revenue from sources outside of search. This did not happen,” Baker writes in her memo, according to TechCrunch. “Our 2019 plan underestimated how long it would take to build and ship new, revenue-generating products. Given that, and all we learned in 2019 about the pace of innovation, we decided to take a more conservative approach to projecting our revenue for 2020. We also agreed to a principle of living within our means, of not spending more than we earn for the foreseeable future.”
The employees impacted by the layoffs will receive “generous exit packages” and help finding new jobs. In the post on the company’s site, Baker discussed how difficult the decision was but, at the same time, emphasized how strong Mozilla is positioned going forward.
“Mozilla has a strong line of sight on future revenue generation from our core business. In some ways, this makes this action harder, and we are deeply distressed about the effect on our colleagues. However, to responsibly make additional investments in innovation to improve the internet, we can and must work within the limits of our core finances.”