When you install Google Chrome you are giving the option to select between Google, Yahoo, and Bing as your default search engine. On Firefox… not so much. For the past three years (longer?) Google has been the default search engine on Firefox. Of course users are allowed to manually switch to other search engines if they wish it, but by default Google is used by all Firefox browsers. The same will continue to happen for the next three years.

Google and Mozilla have recently announced a three-year renewal in their deal to keep Google as the default search engine for Firefox. In return for giving Google default-access to over 450 million Firefox users, Google is paying Mozilla a minimum of $300 million per year for the next three years. Note the emphasis on minimum — if Firefox surpasses certain performance metrics (i.e. if Firefox drives more traffic to Google than expected), Google will throw even more cash at Mozilla.

Of course the ~$1 billion over three years are unofficial, leaked numbers (Google and Mozilla did not announce details about the financial aside of the deal). However, unofficial they may be but the numbers are significant indeed. In 2010 Mozilla made $123 million in revenue (with 84% of that coming from Google). Now Mozilla is set to make $300 million minimum per year for the next three years from Google plus a few million from other sources such as Yahoo and Microsoft – almost a 200% jump in annual revenue. Since the Mozilla Foundation is a non-profit organization that doesn’t mean more money into the pockets of its executives, although I am sure they will be given bonuses and raises. Rather, it – hopefully – means greater investment into improving the browser (on desktop and mobile platforms) that changed the face of the Internet — quite literally.

Now the question is with Google’s own Chrome rivaling Firefox and even besting it in market share, why would Google throw so much money at Firefox? Wouldn’t they rather Firefox just die away so Chrome can flourish? Is this some sort of maniacal plan for Mountain View to take over the world? No and maybe are the answers to the later two questions. The answer to the first question is not a simple one word answer; one needs two words to describe why Google wants to stay the default search engine in Firefox: Advertising revenue.

Although it may seem like Google is reaching into all aspects of our digital lives (and, frankly, they do offer many services aside from search), the majority of Google’s revenue (and, by association, profit) is made from advertising via search. So while, yes, Google would love for Chrome to be the top-dog, Google cannot simply ignore 450+ million Firefox users. Paying Mozilla almost $1 billion may bolster the competition but it ensures Google receives default-access to about 25% of Internet users and, at the same time, denies the same access to its biggest rival, Microsoft’s Bing. Think of it as between a rock and a hard place.

Here’s to hoping Mozilla puts that billion dollars to good use.

Feel free to share your thoughts in the comments below.

[via Softpedia | Mozilla | AllThingsD | Picture credit: aresauburn]