It would be more surprising to me if Google didn’t do something in the browser space. After all, Google is 100 percent on the Web.”

– Mozilla CEO John Lilly on Google’s incursion into the browser space

Though its servers were initially overwhelmed by the volume of download requests yesterday, Mozilla soon had the Firefox 3 download site humming along nicely. Yesterday afternoon, it was serving up 14,000 downloads a minute and 13 gigabits of data a second. And within 5 hours it had broken Firefox 2’s single-day record of 1.6 million downloads and by 5 a.m. PDT today–18 hours into its world record attempt–it had already blown the doors off the 5 million mark it had set for itself with 6,415,252 downloads. By 7 a.m. PDT it was closing in on 7 million.

“We’re incredibly happy to have released Firefox 3 and for nearly 7 million people so far to care enough to make a positive decision to download it and use it,” Mozilla CEO John Lilly told Digital Daily. “A few more hours left in download day and then we’ll shift away from thinking about download day and back to thinking about what’s next. How to make the browser even more useful on your desktop and in your pocket, and how to help more people understand that the browser is the lens that we often look at the world through today. But it’s been amazing to watch the map though the day as countries woke up and went to sleep–really gives you a sense of how global things are now.”

Global, indeed. Worldwide usage share of Firefox 3.0 has spiked since yesterday. According to independent data compiled live by analysis firm Net Applications, 4.23% of the world’s browsers are declaring themselves as Firefox 3 in HTTP requests.

UPDATE: Firefox 3 has broken the 7 million downloads barrier. As of 7:44 a.m. PDT, 7,067,347 copies of the browser had been downloaded.

(Image Credit: Al Billings)

Turns out, that number probably wasn’t too far off. According to an independent auditor’s report, Mozilla made $66.8 million in revenue in 2006, quite a bit of it from Google (GOOG). As former Mozilla Corp. CEO Mitchell Baker explained in a post to MozillaZine:

As in 2005 the vast majority of this revenue is associated with the search functionality in Mozilla Firefox, and the majority of that is from Google. The Firefox user base and search revenue have both increased from 2005. Search revenue increased at a lesser rate than Firefox usage growth as the rate of payment declines with volume. Other revenue sources were the Mozilla Store, public support and interest and other income on our assets.”

But those “other revenue sources” are piddling in comparison to Google’s contribution, which apparently accounts for a full 85% ($56 million or so) of Mozilla’s revenues.

So it’s supremely ironic then to hear Mozilla CEO John Lilly criticize Apple (AAPL) for distributing its Safari browser for Windows and OS X through its Software Update utility. “What Apple is doing now with their Apple Software Update on Windows is wrong,” Lilly said in a blog post on Friday. “It undermines the trust relationship great companies have with their customers, and that’s bad–not just for Apple, but for the security of the whole Web. … Apple has made it incredibly easy– he default, even–for users to install ride-along software that they didn’t ask for, and maybe didn’t want. This is wrong, and borders on malware distribution practices. It’s wrong because it undermines the trust that we’re all trying to build with users. Because it means that an update isn’t just an update, but is maybe something more. Because it ultimately undermines the safety of users on the Web by eroding that relationship. It’s a bad practice and should stop.”

Now, Lilly may have a point. But he’s hardly the best guy to be making it. As ZDnet’s Larry Dignan notes, Safari–like Firefox–features a Google search box, for which the search giant also presumably pays a placement fee. A sudden gain in market share for Safari at Firefox’s expense could have financial implications for Mozilla. “Let’s say Safari grabs 10% market share and Firefox falls to about 25%,” Dignan writes. “That’s fewer searches and less revenue for Mozilla. Sure, you can argue about whether Apple’s Safari move is above the board. You can also question the security implications and a bevy of other issues. But in the end, Apple’s Safari update and Mozilla’s reaction is like any other story. To truly understand it you have to follow the money.”

UPDATE: John Lilly wrote to me earlier today with a few comments about this post. Here’s what he had to say:

Hi John –

Wanted to follow up on your post just now about us and Apple and Google.

Take this for whatever it’s worth, but revenue and market share didn’t enter my mind when I posted. At Mozilla we obviously care about having enough resources to keep the lights on and pay people, and we care about having enough market share–because it means that we’ve built products that people really care about.

But competition is good and healthy, and essential. Without competition we’d all be in a pretty bad world–sort of like AT&T in the bad old days.

I’ve got zero issues with Apple using their channel to distribute other products–I think that’s a perfectly fine thing for them to do. What I worry about is that users need to trust the security updates they get from their vendors–because if they don’t–if they think there’s an ulterior motive other than keeping software up-to-date–that’s a problem for everyone.

Anyway, I respect your right to write what you think and to be skeptical of the motives of folks like me, but I do say sincerely that in this case, revenue has nothing to do with it.”