#27 How do Web Browsers make money?
Browsers make money every time a user interacts with search or banner ad
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Browser Wars
Browser wars have been happening since Internet Explorer and Netscape Navigator went up against each other to be the best-in-class browser of the ’90s. Netscape had previously been leading the market, but with the release of Internet Explorer 3, Microsoft took the lead. Since it was automatically included in the Windows OS, it became the standard for many desktop users.
The same situation happened when Safari came to be in 2003. Whereas Macintosh users were previously on IE or Navigator, Safari being preinstalled in Apple’s OS means that it gained control of that desktop market.
After some time of IE beating out Navigator, Netscape made the code for the browser open-source and gave it to Mozilla. However, when Firefox was introduced in 2004, it saw a rapid rise in popularity for a few years. That is until Google Chrome was released in 2008 and quickly fought to be the favored browser, which we still see today.
As per Statista’s research, as of September 2020, the Google Chrome browser accounted for around 66.39 percent of the global market share for internet browsers. Apple’s Safari browser was the second most popular internet browser around the world, accounting for over 16 percent of market share. Apart from these two, no other browser controlled more than five percent of the overall market share.
How do Browsers make money?
Royalties from Search & Banner Advertisers
Mozilla Firefox made $451M in revenues in 2018. 95% of Firefox’s revenues came from Royalties. These royalties refer to the percentage of advertising revenue Mozilla receives whenever someone uses the built-in search engine that the Firefox browser provides.
How about Google Chrome? The simple answer is the same as Mozilla Firefox. Google receives money from advertisers but, instead of paying out search royalties to other browsers, the money is transferred to the Chrome part of Google. Google’s chrome business is “extremely profitable” but Google does not share the revenue numbers for Chrome.
As per various industry reports, Google (Search) pays Firefox $400M-$450M in royalties a year. On the other hand, Google pays Safari $9B-$12B a year. Seems like a rather expensive lead generation mechanism to get impressions on Google Ads.
Indirect Revenue Sources
Google Chrome also has indirect ways of making money. For starters, when people use Google Chrome, they are more likely to use a related service—Gmail, Google Apps, Google Docs, etc.—which, in turn, leads to even more usage as the company’s products are highly integrated with each other. Each time a product is used, page views go up and ad revenue increases.
In addition to search royalties, Mozilla earns money from donations and from sponsored new tab tiles
Improved Tracking (for effective ads)
Google’s AdSense program is really interested in your data. Chrome tracks user data and uses it to improve its AdSense program. With more data, each user’s marketing profile can be better understood and ads can be better targeted to potential customers. By promising more effective ads, AdSense is able to charge a higher price for advertising than its competitors.
Marketplace Fees
Most web browsers offer extensions to add new functionalities (eg. Chrome Web App Store). The majority of those extensions are built by third-party developers who can charge for their extension. If they use the Chrome Web Store API to charge users, Google takes a 5% fee.
Final Thoughts
The browser war is here to stay given the leverage that these browsers have for serving Advertisement traffic. In India, a new player has entered this race - Jio! With the launch of a secure multi-lingual browser, JioPages is preparing to take on the Goliath!
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This issue was fantastic! I had no idea what kind of money was being made in this realm. I think I went into the wrong business...