GitHub acquisition agreed by Microsoft

James Marshall
June 5, 2018

Microsoft has agreed to acquire GitHub Inc and a deal could be announced as soon as June 4, according to a report from Bloomberg.

Earlier in the day, reports were doing the rounds that Microsoft had acquired San Francisco-based popular software development platform GitHub.

This is big news as GitHub hosts the world's largest collection of code, with many developers using it as a repository for projects. As with all acquisitions, this one between Microsoft and GitHub is subject to regulatory approval and "customary closing conditions", but assuming that all goes smoothly, Microsoft expects the deal to close by the end of the calendar year.

Decade-old GitHub is built on Git, the open source version control software originally written by Linux creator Linus Torvalds. GitHub's last public valuation, in 2015, was $2 billion.

Satya Nadella, CEO of Microsoft, has written about the acquisition on the Official Microsoft Blog, stating that "Developers are the builders of this [digital technology] era, writing the world's code". Github's co-founder Chris Wanstrath will be a technical fellow at Microsoft. Primary among them is the likelihood that competitors to Microsoft would move their code repositories off GitHub, diminishing its value as a community.

GitHub will still operate independently from Microsoft, with Nat Friedman, now Microsoft Corporate's vice president, assuming the role of GitHub CEO.

By being able to work closer with GitHub and push its services onto the repository for developers, Microsoft is probably hoping that it leads to even more developers using their tools and systems for work - leading to more sales of Microsoft's products and services.

Microsoft purchased GitHub for $7.5 billion.

GitHub will retain its developer-first ethos and will operate independently to provide an open platform for all developers in all industries.

A source with insights into the ongoing negotiations told CNBC that the deal first came about as a result of discussions around a joint $35 million marketing partnership. In fact in 2016, Microsoft was reportedly toying the idea of buying GitHub, although the latter has denied those reports.

Of course, being so essential to many developers' workflows means that any slight change to GitHub (let alone drastic ones) could alienate much of the platform's user base. "We have been on a journey with open source, and today we are active in the open source ecosystem, we contribute to open source projects, and some of our most vibrant developer tools and frameworks are open source", Nadella said.

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