Mozilla Creates For-Profit Unit, But Insists It's Not 'Selling Out'

The Mozilla Foundation on Wednesday launched a for-profit subsidiary that will take over the development of the popular Firefox web browser and Thunderbird email client, but assured its supporters in the open-source development community that it wasn't selling out. The non-profit foundation said that the launch of the Mozilla Corp., formed this week, was necessary to eliminate legal and tax issues that would arise, if the foundation tried to make money from its desktop products.

The foundation said it would control the activities of the corporation and retain ownership. All profits would be invested back into the non-profit's projects. There are no plans for shareholders, stock options or dividends.

In explaining the move, the foundation apparently sought to ease concerns of the many developers who contribute to the group's open-source projects without compensation.

Postings on MozillaZine, an independent Mozilla information site, in response to the announcement showed supporters were wary.

"No, open source is not democracy, but this does feel a little like those responsible for many other peoples' coding and other hard work are doing strange things that have not been discussed and should not be discussed, just accepted," someone identified only as imforumman wrote. "Doesn't feel bad, but it does feel a little not-so-good."

Chris Blizzard, who switched from a foundation director to the same position in the corporation, said people working for the for-profit entity would be paid "reasonable salaries," but no one would become millionaires from the compensation they receive.

"We're not set up that way," said Blizzard, who also works for Linux distributor Red Hat.

Because the corporation would continue to depend on the open-source developer community, which largely works for free, Blizzard acknowledged that it would be important that company executive do not get rich at the expense of others' labors.

"No part of the community will benefit from any other part," Blizzard said. "We don't expect to see any jealousy in that regard."

Besides developing Firefox and Thunderbird, the corporation would also handle all relationships with commercial companies. Income would be used to help the foundation and the for-profit entity become more self-supporting, the foundation said.

Blizzard said forming a corporation would make it easier to receive payment, for example, from companies looking for customized versions of Firefox. Nonprofits, which have to generate most of their revenue from contributions, have difficulty under tax laws to collect payment for services, he said.

Analysts have said that in order for Firefox to reach a strong competitive position in the market place, considered to be above 30 percent, the browser has to be adopted by large businesses.

"Businesses know how to relate to other businesses, but they don't know how to relate to nonprofits," Blizzard said. "That's been a basic problem."

Nevertheless, the corporation's primary goal would remain in line with the foundation's, which is to promote choice and innovation on the Internet, Blizzard said.

"The corporation's primary goal is not profit," he said. "Revenue (however) is nice, because it'll let us promote activities that make the (Firefox) product and brand successful."

Firefox has gained attention as its market share has increased, apparently at the expense of Microsoft Corp.'s dominant Internet Explorer. Market share numbers, however, vary considerably among web metrics firms, ranging from 6.75 percent to 14 percent.

On the development side, the foundation has had difficulty getting out the next Firefox release. Version 1.1, which had been expected in July, was recently scrapped for a 1.5 version that's scheduled to ship in September.

In reorganizing the foundation as a result of the latest move, Mitchell Baker, foundation president, was appointed president of the corporation, and Brendan Eich, a foundation director, was hired as chief technical officer. The corporation has its own board, which is under the foundation's board.

Baker will sit on both boards. The corporation's board also will include Reid Hoffman, chief executive of LinkedIn, an online social network for professionals.