They also sponsor Github and many others.
It's hard to see a business case for Google that includes supporting Mozilla. That Google has done it in the past may be more symptomatic of big dumb inertia than anything else.
I'd be happy to see a business case put forward for Google helping Mozzilla develop a mobile operating system to compete with Android.
(That's a ball park estimate of how much it would cost to fund and administrate several projects)
Conversely, even the minimum business process of some VP looking at the list and saying, "We are not going to fund a competitor," Occam Razors this year's events.
EDIT: If Google only wanted to fund things that directly benefit them, you'd've thought they'd do just that, none of this faffing about with an application process and only funding student work, no?
If giving $150,000 to Mozilla materially erodes Google's business, giving $150,000 to Mozilla isn't the actual problem.
"Every thing was going fine for us, but then the CEO didn't pick up a penny he saw on the street and the whole thing fell apart."
If they weigh business cases at all, they might have considered the value of goodwill they generate for funding competitors to outweigh any loss(es).
Aside: how does Google benefit from sponsoring Blender3D, in your immediate-profit-driven opinion?
Now that Chrome dominates and Mozilla is working on a competitor to android, well...
I'm pretty sure the bad press generated by Google singling Mozilla out would be far worse than any gain they would get.
Because Google doesn't care how people use the web and they want them to use it as much as possible, whether it's with FF, IE, or Safari.
Once they get to the web they will be using Google products, and that's what they care about.
What you say matches Google's marketing copy, but the aggressive marketing of Chrome (up to an including shady deals with other software to install Chrome in addition to itself) suggests to me that their marketing copy doesn't match their actual actions (though it may match what some of the engineering team on Chrome _thinks_ is going on).
[1]: https://en.wikipedia.org/wiki/Reductio_ad_absurdum
[2]: https://en.wikipedia.org/wiki/Deductive_reasoning
[3]: http://en.wikipedia.org/wiki/Mathematical_induction [3]