Microsoft pursues developers with $7.5B GitHub buy, but they’re Gitting out fast

To capitalize on GitHub’s active developer community, Microsoft acquired the company for $7.5B -- but developers already want out.

June 5, 2018

Microsoft announced yesterday that it had acquired GitHub, the open source digital repository for developers, for $7.5B in stock.

Microsoft is buying the site to sell its cloud services and developer tools to GitHub’s active community — which benefits GitHub investors, but raises red flags for users concerned about the platform’s independence.

The future is wide open (source)

MS’s acquisition of the world’s premiere open source network is a reversal of past policy at ‘Soft. In 2001, their CEO famously called Linux (an open source code that threatened Microsoft’s many patents) “a cancer.”

But since then, MS has accepted open source inevitability — and now it’s more focused on attracting developers to its Azure cloud.

Last year, the company closed its GitHub competitor, CodePlex, and now it hopes to attract GitHub’s developers, who have collectively used the platform to store 80m software projects.

Microsoft takeovers haven’t been perfect in the past

Acquiring mature companies for their user bases is a classic MS strategy (used to buy Skype, Nokia and LinkedIn), but one that often results in the slow death of the original companies.

And, while the big ’Softie hopes to win over GitHub’s 28m contributing developers to dominate the cloud services industry (expected to hit $300B by 2021), many of them have already started to jump ship. 

GitLab, GitHub’s most direct competitor, saw a 10x increase in daily use 2 days ago when whispers of the alleged acquisition first surfaced.

Well, at least it’s a win for GitHub investors

GitHub has only raised 2 rounds of financing (for a total of $350m) since it was founded in 2008. But their most recent round of funding in 2015 only valued the company at $2B — meaning the $7.5B sale was a huge investment multiplier for VCs with money riding on the ’Hub.

Take, for example, Andreessen Horowitz, which made over $1B on the deal — a 10x return on the $100m check they wrote GitHub back in 2012.

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