Microsoft (msft) is expected to announce later today that it has acquired GitHub, a code repository.
Although details of the deal are not yet available, some sources say the deal could be worth at least $5 billion. GitHub was valued at $2 billion in 2015, but it’s no stranger to poor performance. In three quarters of 2016 it lost $66 million. Here’s what you need to know about the deal.
What is GitHub?
GitHub is “like google docs for developers,” allowing them to share and collaborate easily. The company is based on the principle of open-source licensing, where developers are allowed to access, use, and tweak code written by others with the goal of improving it. Since its founding in 2011, GitHub has become an essential tool for some of the biggest tech companies such as Apple, Amazon, and Google. Microsoft has become the biggest contributor to the repository.
Why does Microsoft want it?
In many ways, Microsoft’s acquisition of GitHub is a move back to its roots as a company founded to help people make use of the MITS Altair, a consumer-oriented micro-computer kit. But Microsoft has also been skeptical of open-source in the past, as it threatened their business model, which relies on proprietary technology. In recent years, under CEO Satya Nadella, the company has begun to embrace open-source technology, however. There are even rumors that Microsoft’s core operating platform, Windows, may become open-source. GitHub has become an essential way to connect with developers as the company’s business model has evolved and allowed it to open itself to open-source code.
Why is GitHub selling?
GitHub reportedly preferred selling to going public, and chose Microsoft after meeting Nadella and being impressed by him. Despite the centrality of GitHub for the developer community, the company has lately run into some financial and leadership issues. In addition to the company’s losses in 2016, they have been looking for a new CEO since August 2017. A previous CEO was accused of sexual harassment and left the company.
Why is everyone so nervous about it?
Despite Microsoft’s turn towards open-source, some GitHub users remain concerned that Microsoft’s leadership will undermine the core values of the system and hurt the developers that rely on it. One developer told Quartz he was concerned that Microsoft would use its ownership of the platform to monitor trends in software development in order to launch rival products, using largesse to preclude competition.
Fears that GitHub is “dead” have led many developers to jump ship in favor of GitHub’s competitors. One competitor, GitLab, announced on Twitter that it was seeing ten times the normal number of repositories after the deal was first reported.