Microsoft’s Open Source Coup: It’s Buying GitHub for $7.5 Billion

On the heels of its annual Build developer’s conference, Microsoft has announced it’s purchasing GitHub for $7.5 billion in stock. GitHub’s last public valuation, in 2015, was $2 billion.

Though it has enterprise offerings and paid tiers, GitHub is still not profitable. Bloomberg reports that, over nine months in 2016, the company lost $66 million on revenues of $98 million. Co-founder and CEO Chris Wanstrath stepped down in August, and the company never replaced him.

GitHub is the largest open-source repository in the world, with roughly 27 million users and 80 million projects, which makes it a tempting target for a firm like Microsoft. The acquisition is said to have started as a co-marketing initiative, which grew into a discussion of an investment from Microsoft, before ultimately transforming into an outright purchase.

In 2017, Microsoft shuttered its GitHub competitor, CodePlex, and partnered with GitHub on migration tools for developers who were hosting projects on CodePlex. At the time, Microsoft corporate vice president Brian Harry said: “Over the years, we’ve seen a lot of amazing options come and go but at this point, GitHub is the de facto place for open source sharing and most open source projects have migrated there.”

Microsoft has become increasingly focused on open-source software in the past few years, even releasing the source code for its Visual Studio Code IDE. Just this year, it open-sourced the Azure IoT Edge Runtime, and boasts it’s one of the largest contributors of open-source code.

“Most importantly, we recognize the responsibility we take on with this agreement,” said Microsoft CEO Satya Nadella, according to The Verge. “We are committed to being stewards of the GitHub community, which will retain its developer-first ethos, operate independently and remain an open platform. We will always listen to developer feedback and invest in both fundamentals and new capabilities.”

An acquisition may have been the only path forward for GitHub. While its offerings are popular, monetization has been difficult for the company. Its enterprise and paid tiers weren’t cutting it, profitability-wise, and its nascent Marketplace didn’t make a big splash.

The news comes during WWDC, Apple’s developer conference taking place in San Jose. You might consider it a bit of oneupmanship on Microsoft’s part, considering WWDC’s intense developer focus.

Related