Mozilla Lays Off 250, Says Pandemic ‘significantly impacted revenue’

Mozilla, the maker of Firefox, on Tuesday began cutting about 25 per cent of its global workforce, saying that the coronavirus pandemic’s impact on economies “significantly impacted our revenue.”

The organisation will also go through a restructuring that will reduce some current efforts — developer tools was one example cited — and create a new products group outside of the one responsible for Firefox.

“Our pre-COVID plan is no longer workable,” Mitchell Baker, CEO of Mozilla Corp., the for-profit firm that manages Firefox, and the chairwoman of the Mozilla Foundation, wrote in an email to employees. “We have talked about the need for change — including the likelihood of layoffs — since the spring. Today these changes become real.”

With approximately 1,000 workers as of May, the 250 employees to be laid off some as early as Tuesday, others as local laws allow — represented a fourth of Mozilla’s workforce. A much smaller number — around 60 — will change teams as part of the reorg, while Mozilla will completely shutter its Taipei, Taiwan operations. Those laid off will receive severance at least equal to their salary through the end of the year; in the U.S., Mozilla will also pay for COBRA benefits to the end of 2020.

Today’s moves followed a smaller reduction earlier in the year, when Mozilla shed 70 jobs in January. Before that, troubling signs had long accumulated, including years of browser share declines by Firefox.

Late in 2019, Mozilla’s 2018 financial statement — the latest data yet made public — showed a 20 per cent decline in revenue and for the first time noted that expenses outweighed income. At the time, Mozilla asserted that the revenue decline would not affect its work. “Despite the year-over-year change, Mozilla remains in a strong financial position with cash reserves to support continued innovation, partnerships and diversification of the Firefox product lines,” the organisation wrote.

How much difference seven months, a global pandemic and the worst economic crisis since the 1930s make.

Trouble in browser city

Firefox’s troubles, and thus Mozilla’s because the two are essentially synonymous, have been well documented.

In July, Firefox accounted for 7.3% of the world’s browser activity, as measured by American analytics company Net Applications, which represented a 12.8 per cent year-over-year decline. Currently, Firefox is in line to shed a bit more than one percentage point of share each year. By that forecast, Firefox will shrink to 6.2 per cent by this time next year, to 5.6 per cent by January 2022.

Firefox has seen very tough times before. Four years ago, the browser’s share sunk to 7.7 per cent; then, over the course of the next 12 months, it recovered more than four a half points, reaching 12.3 per cent before shortly starting another long, steady decline.

Mozilla’s own numbers mirror the Net Applications’ data. According to its public data report, Firefox had 244 million users in December (its MAU, or Monthly Average Users metric, was 244,248,100 on Dec. 30, 2019). On Aug. 2, that number was down to 209,031,000, a decline of 14.4 per cent.

This latest downturn, however, has been different — much longer-lasting, for one. And it’s been without recovery, even the smallest, that’s lasted more than a month, two in just one instance, before resuming the sink.

Because of Mozilla’s revenue model — 91 per cent of its 2018 revenue came from payments by search companies, primarily Google, for default place in Firefox — a shrinking share impacts finances. Even if the effects are not immediate and direct, then they’re likely to show up mid-term or when contracts come up for renewal.

Mozilla’s Baker alluded to the ongoing revenue problem in a post to the organisation’s blog. “Recognising that the old model where everything was free has consequences, means we must explore a range of different business opportunities and alternate value exchanges,” she wrote (emphasis added).

It’s not as if Mozilla just figured this out: It has been striving for years to come up with new means of making money. Some of those efforts — in-browser advertising —  were quickly repudiated. In contrast, others, including a significant push into mobile that pitched a new Mozilla-built operating system, foundered after months of work. More recently, Mozilla has pushed to create services and mine the subscription dollars they might bring in. Just weeks ago, Mozilla launched its virtual private network (VPN) in the U.S., Canada, the U.K. and three other countries.

“We must learn and expand different ways to support ourselves,” Baker said. She ticked off some examples of possible new products. “Our initial investments will be Pocket, Hubs, VPN, Web Assembly and security and privacy products.” Mozilla will also assemble a design and UX (user experience) team to support new products, as well as a group whose job it will be to integrate machine learning features into those products.

Baker said next to nothing about how Mozilla would grow Firefox share, seemingly a critical part of any plan to keep the open-source developer alive. The only hint she provided was that growth would come from “differentiated user experiences,” which sounded like a clarion call to make Firefox more customisable or perhaps a plan to use UX to make Firefox stand out from its rivals.

While Baker did not spell out specifics of how Firefox would crawl from the edge it’s now on; she remained defiant that Mozilla must survive to keep the internet honest.

“Mozilla must continue to be part of something larger than ourselves, part of the group of people looking for a better internet,” Baker wrote. “With these changes, we believe we’ll be ready to meet … the challenges and opportunities facing the future of the internet.