Browsers don't generate revenue and Mozilla needs revenue to fund development of Firefox. Mozilla's competitors fund the development of browsers with revenue from other products. For Mozilla to effectively compete in the browser market, Mozilla needs revenue from other products.

Browsers do generate revenue, though. As per https://www.wired.com/story/firefox-mozilla-2022/

  In its 2020 financial results, the most recent available, Mozilla
  listed its total revenue as $496 million, with royalties from search
  deals equaling $441 million

The issue is that Mozilla, inc. is not happy with being a browser vendor and wants to go "beyond the browser" (as their management puts it.) Therefore, they use the browser revenue as a piggy bank for other projects like a rebranded VPN service, a bookmark storing service (Pocket), etc. and let the browser wither on the vine.

In my opinion, if Firefox was owned by a company that liked and wanted to focus on Firefox, it would not be in a death spiral right now. But instead it's owned by a company that wants to use the browser as a cash cow while its market share collapses. And when it finally dies they'll just point at Chrome and say "there's nothing we could have done, Google is too big." Never mind the fact that Firefox beath IE which was also funded by a megacorporation.

Firefox beat IE because Microsoft development of the browser stagnated and Windows + IE were struck with a string of massive security vulnerabilities. Firefox was a more featureful, secure, compliant browser out of the box. Non-technical people were tricked into adding search bars and add-ons to IE that massively degraded performance, perhaps some malicious. Pretty easy to instruct the least technical person you know to click on Firefox and the problems go away.

That is absolutely nothing like the environment that Firefox operates in, today. IE was irrelevant to Microsoft's business and revenue. Chrome was (and still is) a core aspect to Google owning search, which underwrites everything else it does.

Even with limitless resources, there is nothing Mozilla could do to make Firefox so much better that it would regain market share against Chrome. And Firefox's primary competitor's enterprise is highly dependent on being in the driver seat, so that isn't going to change.

Firefox is a great browser, and some people may independently decide to use it. But at this point, if you aren't using Chrome or Edge, it's probably because you have been on Firefox since 2005 and see no point in switching, or because you are making an ideological statement against Google (for privacy, or against web engine monopoly).

That revenue is almost entirely from Google, their biggest competitor. I don't think it's any surprise that they want to diversify from that.

They could reduce dependency by focusing on their core mission, cutting out the cruft, and using the extra money to build up an endowment that can last them forever.

Obviously, they didn’t take that option.

Their revenue is from Google because they chose to make a deal with Google. They could have made a deal with Microsoft or some other search engine provider.

That's one way to look at this. Another way is that Firefox lost market share, and is falling behind. Firefox is also the primary cash-cow for Mozilla. Given both, shouldn't Mozilla be investing in Firefox development to make sure Firefox doesn't fall further behind?

(Mozilla's non-Firefox products didn't actually make any impact thus far).

Unfortunately those other products are nothing special and Mozilla seems happy to damage Firefox by adding ads for Pocket.

I don’t believe that Firefox going from N paid devs to 0 would be positive. As much as I didn’t care for Pocket + etc, I doubt they consume anywhere near 100% of the paid developer time. As a result, zero paid devs would almost certainly leave less dev time for performance, bug fixes, standards compliance, add-ons, leaving us further away from those goals.

Put another way, there’s absolutely nothing stopping this hard fork from happening today. It’s just that maintaining a browser engine is a Herculean amount of work, and having full-time devs is a huge asset.

If a bunch of people want to fork it right now and do this stuff for free, nothing is stopping them. Obviously, it isn't happening, so if Mozilla dies, FF will end up abandoned and we'll be stuck using Chrome.