Microsoft confirms it is acquiring GitHub for $7.5 billion

Microsoft is acquiring GitHub, the source repository and collaboration platform, in a deal worth $7.5 billion. The transaction, which will be paid for with all Microsoft stock, is expected to close by the end of the year.

GitHub is the world’s leading software development platform, with over 28 million users learning, developing and collaborating on the site. It is a large code repository that has become very prevalent with developers and companies hosting entire projects, documentation, and code on the service. Apple, Amazon, Google, and many other big tech companies use GitHub.

This deal could give Microsoft a more leading role within the ecosystem of cloud developers, building software that runs on cloud platforms such as Amazon’s AWS. This ecosystem, until now, has been dominated by Amazon, but Microsoft will be hoping that this move makes that dominance diminish.

Microsoft is a developer-first company, and by joining forces with GitHub we strengthen our commitment to developer freedom, openness and innovationSatya Nadella, CEO, Microsoft

Microsoft had something similar to GitHub in the past, Codeplex, which it closed down in December 2017. At the time it wasn’t clear why Microsoft decided to do this, but after this impending acquisition of GitHub, it is now fairly obvious.

Microsoft is already the leading organization with the most open source contributors on GitHub, with over 1,000 employees actively promoting code to GitHub repositories.

This will be the second large acquisition made by Microsoft in recent years, following the $26.2 billion acquisition of LinkedIn back in 2016. 

What will change?

Initially, not very much. Like I mentioned, the full takeover will only go through by the end of the year. So in the short-term at least, you don’t have much to worry about.

In all honesty, nobody knows what is going to change, as we can’t predict the future. GitHub could go on to further dominate its field, or Microsoft could decide to turn its attention elsewhere, leaving GitHub to fade into obscurity as a result. This is all speculation, however.

What we can do, is take an example from the past and try to see how it compares to the present.

github

In the long term, we can look at something like Skype as an example of how being acquired by Microsoft can affect a company.

There are actually some interesting similarities between this GitHub acquisition and the one of Skype back in 2011. Both companies cost Microsoft over $7 billion (GitHub $7.5b, Skype $8.5b), and both companies posted record profits in the lead up to being bought out.

And the similarities don’t end there. After being taken under Microsoft’s wing, Skype found itself being incorporated into many Microsoft projects. Not to mention that they closed down two of their platforms in favour of Skype – those being Windows Live Messenger and Lync, both of which Skype replaced.

I mentioned that Microsoft recently closed down its software development portal – Codeplex, in 2017. Sounds familiar, huh? It would appear that Microsoft is going down the same route as they did with Skype. First – close down existing apps and second – replace them with their newly acquired solution.

So for GitHub enthusiasts, I wouldn’t worry much. Microsoft has really taken a stance on being open source (although we all know this could change at the drop of a hat) in recent years, something nobody would have imagined 15 or even 10 years ago.

GitHub users aren’t taking the news well

Despite the fact that the acquisition will probably go smoothly and that GitHub will likely only improve, it has to be said that there seems to be a certain amount of unrest already with GitHub users.

Since the news broke, GitLab, a competitor of GitHub, claims that it has seen an increase of over 10x in the number of developers moving their repositories to its service.

One thing Microsoft won’t be able to stop is the concern that vital tools and internet services will stop being open source. Instead, they will be concentrated into the hands of a few powerful organisations, Microsoft being one itself.

Take a quick look at the Google search trends for ‘GitLab’  over the last 7 days (May 29th – June 5th, 2018) and you can see the big spike in user interest for GitHub’s biggest competitor. It starts to grow in the morning, when rumours of this acquisition emerged, and reached its peak just after the announcement was made public.

What does GitHub have to say?

Both GitHub and Microsoft came out with news bulletins around the same time, yet the actual information in both is slightly different. Facts and figures remain the same throughout, yet in the GitHub statement there seems to be a lot more personal thoughts talked about. Take a look:

I’m extremely proud of what GitHub and our community have accomplished over the past decade, and I can’t wait to see what lies ahead. The future of software development is bright and I’m thrilled to be joining forces with Microsoft to help make it a reality.Chris Wanstrath – CEO, GitHub

That name – Chris Wanstrath, will soon be a name not often seen when talking about GitHub. The current CEO will be moving to Microsoft as part of the acquisition. Details aren’t clear as to what he’ll be doing at Microsoft, though.

There is more detail, however, on who will be taking over as CEO of GitHub. That honour will be going to Nat Friedman. Friedman is the current Corporate Vice President at Microsoft, as well as the founder of Xamarin (the open source implementation of .NET which was also acquired by Microsoft back in 2016). So he is a man that knows how to handle being bought out by Microsoft.

This can only be good news as far as GitHub is concerned.

Wanstrath finishes his statement with:

As for me, I’ll be taking on a new role at Microsoft working closely with Nat and the team, and will share more details on that in the future.Chris Wanstrath – CEO, GitHub

“More details on that in the future” Oh, Chris, you tease. We are looking forward to finding out more about those details later on!

What’s next for Microsoft?

With acquisitions coming left and right for Microsoft, you would be forgiven for thinking that perhaps they have fingers in too many pies. The streamlined and internal eco-system model hasn’t really paid off for Microsoft in recent years, with companies like Google and Apple making the most of this pattern.

However, it seems that Microsoft has decided that the way forward is the way of the past. Purchase, invest and perfect existing services.

The developers of Skype, GitHub and LinkedIn almost certainly never imagined a company like Microsoft would be buying them out at some point, yet here we are. Those same developers built these solutions from the ground up, and that can only be a huge advantage for Microsoft and all its future efforts.

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