Approximately three years ago, Yahoo and Mozilla announced that Yahoo would be the default search engine in Firefox in the United States. That relationship ended early when Mozilla released the much improved Firefox Quantum browser last month, with Google as the default search provider.
Now, Yahoo's parent company, Oath (Verizon), is suing Mozilla for breach of contract. Oath says Mozilla "finalized a long-term strategic agreement with Yahoo" on November 10. Yahoo adds that before filing the lawsuit, "it demanded that Mozilla take immediate action to rectify its breaches and rescind its notice of termination."
lawsuit seeks unspecified monetary damages and Mozilla interests. We have not seen the contract, but Mozilla's reasoning for the termination is clearly stated in a cross-complaint against Yahoo / Oath, claiming that it had the right to terminate the relationship under the contract:
We recently exercised our contracts right to Rescind our agreement with Yahoo based on a number of factors including doing the best for our brand, our effort to provide a quality web search and a wider content experience for our users.
Immediately after the acquisition of Yahoo, we embarked on a long, multi-month process to seek guarantees from Yahoo and its acquirers with respect to those factors. 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 response and counterclaim indicate that there was a clause that gave the company an exit if certain conditions existed or did not exist. The dispute in court is likely to be reduced to an objective determination of whether Mozilla's concerns were legitimate and supported by evidence.
Mozilla basically says Yahoo did not meet the search quality standards it promised to maintain at the time of the initial agreement in 2014. Below is an excerpt of some of the interesting factual allegations in Mozilla's written submission:  Yahoo Search consistently failed to retain users and search volume over time, reducing potential revenue [for Mozilla] under the Strategic Agreement. Instead of focusing on improving the quality of its search product, as Yahoo assured Mozilla that it would do so before entering into the agreement, Yahoo focused continuously on short-term monetization and special events such as the Olympics and elections, expense of product quality. . .
These problems started early in the relationship. As early as January 2015, Mozilla began conversations with Yahoo about deficiencies in the quality of the search product. . . Mozilla determined in January 2015 that the user experience that Yahoo Search provided was below average [and] identified "five areas in which I would like to push Yahoo for one of the next few weeks." … In no order at all. In particular, these problems that affect the search quality include the relevance of the advertisements published in the users, the aggressive self-correction, the sub-par relevance results, the content of the answers and the basis to activate a particular content.
Mozilla continued this type of conversations with Yahoo in March 2015, reiterating that Mozilla "wants improvements for both parties to increase market share," but "current experience is causing users to move."
Mozilla cites third-party data stating that during the term of the agreement, Firefox lost market share in Chrome. Attribute this (at least in part) to the Yahoo search. Yahoo / Oath will probably argue that problems with the browser experience (eg, speed and performance) were to blame. The truth is probably somewhere in between.
The market share of Firefox is about 13 percent, and Chrome's, about 59 percent. Yahoo's search market share is approximately 12 percent of Google's 63 percent.