Strategic value? Why everyone is talking about Microsoft Acquiring GitHub

Microsoft Will Acquire GitHub For A Whopping $7.5 Billion in Microsoft Stock. But What Does This Mean For The Developer Haven?

Microsoft Corp. on Monday announced it has reached an agreement to acquire GitHub. Together, the two companies will empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsoft’s developer tools and services to new audiences.

“Microsoft is a developer-first company, and by joining forces with GitHub we strengthen our commitment to developer freedom, openness and innovation,” said Satya Nadella, CEO, Microsoft. “We recognize the community responsibility we take on with this agreement and will do our best work to empower every developer to build, innovate and solve the world’s most pressing challenges.”

Under the terms of the agreement, Microsoft will acquire GitHub for $7.5 billion in Microsoft stock. Subject to customary closing conditions and completion of regulatory review, the acquisition is expected to close by the end of the calendar year.

According to the Microsoft Press Release, GitHub will retain its developer-first ethos and will operate independently to provide an open platform for all developers in all industries. GitHub is the world’s leading software development platform where more than 28 million developers learn, share and collaborate to create the future. Developers will continue to be able to use the programming languages, tools and operating systems of their choice for their projects — and will still be able to deploy their code to any operating system, any cloud and any device, said Microsoft.

Change of leadership

Microsoft Corporate Vice President Nat Friedman, founder of Xamarin and an open source veteran, will assume the role of GitHub CEO. GitHub’s current CEO, Chris Wanstrath, will become a Microsoft technical fellow, reporting to Executive Vice President Scott Guthrie, to work on strategic software initiatives.

“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,” Wanstrath said. “Their focus on developers lines up perfectly with our own, and their scale, tools and global cloud will play a huge role in making GitHub even more valuable for developers everywhere.”

The future of work

GitHub is home for modern developers and the world’s most popular destination for open source projects and software innovation. The platform hosts a growing network of developers in nearly every country representing more than 1.5 million companies across healthcare, manufacturing, technology, financial services, retail and more.

Founded out of San Francisco in 2008, GitHub is better known for its free-to-use public open source libraries, which are used by countless companies, governments, and organizations to open their code for collaboration among the wider developer community. GitHub also offers private and enterprise-focused code repositories, which come at a fee.

GitHub had raised around $350 million in funding since its inception, including a chunky $250 million round led by Sequoia Capital back in 2015, which gave GitHub a valuation of around $2 billion. However, GitHub has reportedly been hemorrhaging cash for a while, so any deal was expected to weigh in at substantially less than the company’s 2015 valuation. But that didn’t turn out to be the case — $7.5 billion is substantially more than many would’ve predicted, even if it is an all-stock transaction.

Microsoft opens up

Meanwhile, Microsoft has a history of hating open source like Captain Kirk hated Klingons; past CEO Steve Ballmer called open source a “cancer” in 2001 and compared it to Communism a year earlier. However, more recently Microsoft claims to have done a complete reversal. The company now swears it loves open source, and has put actions behind words.

What happened? The times changed. Microsoft is now arguably the open source community’s greatest champion, contributor and user.

Microsoft endorses open source in several different ways, Mark Russinovich CTO, Microsoft Azure has been fairly vocal in this matter. In fact, while announcing the Coco Framework for enterprise blockchain networks, Russinovich said, in a blog, ‘I believe Coco can only benefit from the diverse and talented open source communities that are driving blockchain innovation today. While Coco started as a collaboration between Azure and Microsoft Research, it has benefitted from the input of dozens of customers and partners already. Opening up Coco is a way to scale development far beyond the reach and imagination of our initial working group, and our intent is to contribute the source code to the community in early 2018.

Coco will be compatible, by design, with any ledger protocol and can operate in the cloud and on-premises, on any operating system and hypervisor that supports a compatible TEE. We are building in this flexibility in part to allow the community to integrate Coco with additional protocols, try it on other hardware and adapt it for enterprise scenarios we haven’t yet thought of.

Industry enthusiasm for blockchain is growing, and while it will still take time for blockchain to achieve enterprise assurance, we remain laser focused on accelerating its development and enterprise adoption in partnership with the community.’

But not everyone is convinced. Microsoft’s acquisition of GitHub has paid off for rival GitLab. Many GitHub users were unhappy at the Windows-maker’s involvement and promptly jumped ship — there were over 100,000 repositories imported in the 24 hours following the acquisition, and #movingtogitlab was trending on Twitter.