GitHub has just hit the jackpot. The tech company, which hosts open source code, was most recently valued at 1.7 billion dollars. Today, Microsoft finalized a deal to purchase the company for almost 7 times that amount. Why does Microsoft see so much value in a company that most have never heard of?
GitHub may not be a household name for the average person, but many developers use it on a daily basis. GitHub hosts open source code, and companies like Google and Microsoft use it frequently. Open source code allows anyone to get at it, and more importantly- improve upon it.
Rick Lane, an analyst in the industry, had this to say about the acquisition, “Microsoft’s $7.5 billion acquisition of Github reflects the company’s ongoing pivot to open source software, seeking to further broaden its large and growing development community.”
Microsoft seems to be returning to its roots with this purchase. Microsoft used to be heavily in the market of software development tools. Now a multi-billion dollar company, Microsoft competes with platforms like GitHub and has even been antagonistic towards them in the past.
GitHub, although extremely popular with 27 million developers hosted on its platform, has had problems as of late. 2016 saw losses of over 60 million dollars for the company. Besides the money troubles, the company has been on the hunt for a new CEO. The lack of leadership and perceived issues with money could be the main contributing factors to GitHub selling. GitHub could have gone public but decided it wanted to keep more control and went with a buyout instead.
Once the deal closes later this year, the role of CEO will go to Microsoft vice president Nat Friedman. Sounds like the autonomy that the company wanted to keep will not be quite as strong as they have made it out to be. Having a competing company buy you out, and then install one of their executives straight into the inner workings, seems like a complete takeover to me.
