The Mozilla Corporation said today it’s laying off ab0ut 250 of its staff in an attempt to cut costs as it struggles to deal with the financial impact of COVID-19.

Mozilla Chief Executive Mitchell Baker (pictured) announced the layoffs in a blog post, just hours after notifying the affected employees. Baker, who became CEO in April, explained that Mozilla was struggling to adapt its finances for a post-COVID-19 world, and that it was trying to refocus on new, more profitable commercial services.

Mozilla attempted to minimize the financial impact of the pandemic with “immediate cost-saving measures such as pausing our hiring, reducing our wellness stipend and canceling our All-Hands meetings,” Baker said.

But that wasn’t enough, and the nonprofit organization has taken the drastic step of reducing its workforce by about a third.

“We have talked about the need for change — including the likelihood of layoffs — since the spring,” Baker said. “Today these changes become real.”

In addition to the layoffs, Mozilla is closing down its operations in Taipei, Taiwan, and transferring 60 workers to new teams.

The 250-plus employees who have been laid off will all receive severance pay for the rest of the year, plus bonuses, Baker said. Mozilla will also try to help them find new employment by publishing a “talent directory” where it will advertise their skills and experience, if they agree to have their names listed in it.

Mozilla’s problem is simple: It’s not making as much money as it used to. Its main source of revenue is derived from its open-source Firefox browser, which was once the most popular on the internet. In 2011, Mozilla signed a $300 million-a-year deal with Google LLC to make its search engine the default in Firefox.

But the browser’s declining popularity means that companies like Google aren’t willing to part with so much cash any more. In 2017 Firefox was used by 11% of all internet users, but that number has fallen to less than 4%, according to statistics from the U.S. government’s Digital Analytics Program.

Mozilla’s latest contract with Google is set to expire by the end of this year, and it has not been renewed. Without that revenue, the future looks bleak for Mozilla.

Mozilla has tried to generate revenue through other means, most notably with Firefox phones running Firefox OS, but those efforts have been in vain, and it was forced to lay off 70 employees in January.

Baker said Mozilla will rethink its core business model going forward, with more focus on financially viable products. It’s largely pinning its hopes on its new virtual private network offering, Mozilla VPN, which was officially launched this month. VPNs are a profitable business, and though Mozilla is late to the game, it’s hopeful that its reputation for putting privacy first will help it to take a sizable share of that market.

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE it was sad to see today’s developments, since Mozilla has always been a David battling against Goliaths such as Google and Microsoft Corp.

“Mozilla always had that sympathy bonus, but it failed to innovate with capabilities that made a real difference for people,” Mueller said.

Still, Mueller said the fight is not over for Mozilla or Firefox, and that with its new focus on potentially more profitable offerings such as its VPN, it still has a shot at changing the browsing experience and becoming more relevant again

“It just needs a few product hits or strong releases in the next couple of years,” Mueller said. “That’s easier said than done, but Mozilla still has the talent and capabilities to do so. Now it needs to deliver.”

Photo: Hubert Figuière/Flickr