There are a number of articles around the web this week making all kinds of guesses and predictions about the Google and Firefox search relationship. I realize that this is mostly inside baseball, but I'd expect those covering this as "news" to be a little more familiar with how this stuff all works. Apparently they don't so here's a quick tutorial on "the economics of the Web".
The economic model that's driven the Web for most of its existence is advertising. Back in the day it was banners and pop-ups. Today it's AdWords and AdSense.
The model works a lot like the previous era of television or newspapers. Advertisers pay content providers to include ads alongside their content. Content providers make most of their money from advertisers. Users get a "free" service.
Google is one of the most successful companies on the Web because they were the first to figure out and sell highly effective ads on the Web. Their innovation was highly context sensitive ads that are more likely to get clicks than the previous generation of ads. When you search for something, Google knows precisely what it is you're after and they can serve ads to you based on your search input (and anything else they know about you from your other Google interactions.)
Google started out as a search company. But that's not what they are today. Google's primary business is advertising. From their SEC filing on the nature of their operations, "We generate revenue primarily by delivering relevant, cost-effective online advertising."
Google brought in $9.7B in revenues in Q3'11. 96% of that revenue was from ad sales. They bundle those ads with some great "free" products like Google Search, YouTube, Gmail, etc. so I'm not complaining here. It's a good deal for lots of users. I use some of Google's services and I visit lots of sites that depend on AdSense to pay the bills and keep publishing great content and providing valuable services.
Not all traffic to Google ads is "organic" though. To help drive ad sales, Google pays for traffic to their ads. They paid out $2.21 billion, or 24% of their ad revenues in "Traffic Acquisition Costs". That money goes to revenue shares with their AdSense partners and to "distribution partners" -- presumably browser makers, PC OEMs, and mobile OEMs and operators.
This is Google's business. They sell ads alongside "free" content, and they buy additional traffic to make those ads more valuable.
For years, many in the tech press have presumed that Google is "donating" money to Mozilla. They're not. They're no more donating to Mozilla than they are to Opera or Apple, both of which derive significant revenue by sending search traffic to Google. For Opera, that appears to be about $50M in the last 12 months. (Apple doesn't disclose the details of their arrangements with Google.) They're no more donating to Mozilla than they are to the handset makers and carriers they pay to distribute Android. It's a simple business deal. They sell ads and they do what they can to put eyes in front of those ads.
Now, and again, I'm not saying there's anything wrong with that. It's a fine model and it's the model that most of the Web depends on today. Take it away and we would certainly have fewer of the great things we all love about the Web and we'd be paying subscriptions for what remained. But Google is not a philanthropist "donating" money to Mozilla or any other "traffic acquisition" partner.