Mozilla, Oath Sue Each Other over Terminated Yahoo Search Engine Deal
Just days after Yahoo Holdings/Oath sued Mozilla for breach of contract, the organization behind the Firefox Web browser has fired back with a breach of contract countersuit of its own.
The dispute has its roots in a 2014 partnership agreement in which Mozilla agreed to make Yahoo the default search engine for Firefox in the U.S. Mozilla recently terminated that agreement, citing several factors stemming from Verizon's $4.48 billion acquisition and restructuring of Yahoo earlier this year.
The rebranded organization, which includes Yahoo Holdings and a separate business called Oath, sued Mozilla for breach of contract on Friday in California's Santa Clara County Court. The lawsuit seeks damages, court costs and other forms of relief that have not been publicly disclosed. Filed yesterday, Mozilla's countersuit in turn seeks "general, specific, and compensatory damages."
'No Relationship Should End This Way'
Writing yesterday on the Mozilla blog, chief business and legal officer Denelle Dixon said her organization decided to terminate its agreement with Yahoo/Oath based on a number of factors, including doing what's best for the brand, its effort to provide quality Web search, and the broader content experience for its users.
"Immediately following Yahoo's acquisition, we undertook a lengthy, multi-month process to seek assurances from Yahoo and its acquirers with respect to those factors," Dixon said. "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."
Dixon added that the terms of Mozilla's agreement with Yahoo clearly spell out its post-termination rights. She also noted that although many of the legal issues between the two organizations are confidential, Mozilla plans to create a wiki page and provide other details publicly in the interest of openness and transparency.
"No relationship should end this way -- litigation doesn't further any goals for the ecosystem," she said. "Still, we are proud of how we conducted our business and product work throughout the relationship, how we handled the termination of the agreement, and we are confident in our legal positions."
In its complaint, Mozilla also asked that Yahoo comply with the agreement's payment requirements, noting that those "are key to financing Mozilla's efforts to launch the new version of its flagship product, Firefox."
Yahoo Claims 'Competitive Injury'
Mozilla's termination of its agreement is "a breach of the plain terms of the parties' contract," Yahoo Holdings/Oath said in a heavily redacted version of its Dec. 1 complaint. According to the lawsuit, Mozilla sent the organizations a letter on Nov. 10 stating its intent to terminate the agreement "effective immediately."
Yahoo/Oath is seeking damages, stating that it has "suffered and will continue to suffer competitive injury to its business and reputation, among other harm, and Mozilla's material breaches and bad-faith conduct are a substantial factor in causing such harm."
The lawsuits are just the latest of many stumbling blocks that Yahoo has faced in recent years. Once valued at $125 billion, the company's acquisition by Verizon represented the "saddest $5 billion deal in tech history," according to Forbes. Following the 2016 announcement of its intent to purchase Yahoo, Verizon whittled down the price based on Yahoo's subsequent disclosure of major breaches in 2013 and 2014 that affected Yahoo's 3 billion user accounts.
Former Yahoo president and CEO Marissa Mayer left the company after the Verizon acquisition was completed, losing out on $14 million in bonus and award money based on investigations into the breaches. Yahoo also faces dozens of class action lawsuits in the U.S. related to those breaches.
Following the closing of its purchase, Verizon rebranded several Yahoo and AOL (a 2015 Verizon acquisition) businesses under the name "Oath." Other parts of Yahoo's business have been renamed "Altaba."
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