Microsoft Snaps up GitHub for a Meager $7.5bn - 8 Key Questions Answered

Why did Microsoft acquire GitHub?

Microsoft's key interest is in growing Azure as quickly as possible to overtake AWS and stay ahead of GCP. Every acquisition that gets the company substantially closer to this goal makes sense.

How does the GitHub acquisition help grow Azure past AWS?

Enterprises and individual developers are using GitHub as their code repository for any development technology, including Microsoft .NET, Java, Python, Terraform, Ruby, and so on. Microsoft will now aim to closely integrate these repositories with Azure, to make Azure and AzureStack the preferred deployment target for any development technology.

Is $7.5bn the right price for GitHub?

As Microsoft abandoned its own open source repository due to Git the question about whether $7.5bn being the right price for GitHub is not a financial one, but one that is based on deep strategic consideration. For $7.5bn Microsoft did not buy a company with a run rate of approximately $200m, but it purchased access to a very large share of the worldwide open source code and community. Major enterprises, small startups, and individual developers all have one thing in common: they store their open source software on GitHub. For cash flushed Microsoft, spending $7.5bn on a major strategic asset is a no-brainer.

Is the product a fit for Microsoft's portfolio?

While the .NET universe is focused on Microsoft Visual Studio Team Services, Microsoft can now position GitHub as the open source extension for Team Services, to enable enterprises to jointly manage commercial and open source code. From a technical perspective, both products will have a dramatically different code base, but this should be manageable as most or all Microsoft tools already feature GitHub integration.

Competitive Impact

Google is collaborating with GitLab

While Google will not be happy about Microsoft suddenly become a player in the enterprise code repository market, but the company is focused on its partnership with GitLab to position GCP as the ideal target cloud for enterprise IT transformation. Therefore, the impact on Google will not be significant.

AWS is losing out

Going with their own AWS CodeCommit proprietary source code management solution will cause problems for Amazon down the road. This is a strategy that is very similar to adopting their own CloudFormations infrastructure orchestration language instead of leveraging already existing standards. While AWS was not looking to buy GitHub (my opinion), I believe that this would have been a worthwhile investment, because denying enterprises choice never leads to the desired result.

PyCharm, my personally favorite IDE integrates with GitHub (source: website)

Docker is also loosing out

The company is focusing on DevOps pipeline automation, compliance, and security as its main differentiators in a more and more competitive marketplace. Adding GitHub would have been a stretch, as a software company may not be able to run a large SaaS business, but it would have made strategic sense, as Docker is now at risk of engaging into an uphill battle against the major clouds, as well as VMware and Linux container vendors such as RedHat, Canonical (Ubuntu), and SuSe. But at the end of the day, it is a fair assumption that Docker simply does not have the available cash for this $7.5bn purchase.

Can Microsoft be a stewart of the open source developer community?

While Microsoft has been stressing its commitment to open source and its position as the leader in contributions in many communities, I am questioning Microsoft's ability to an open community such as GitHub. As a commercial entity, Microsoft is obliged to maximizing shareholder value. While the company will not openly destroy the Switzerland-like status of GitHub, Microsoft surely will steer the development of this platform toward integration with Azure and other Microsoft-technologies, over GCP and AWS. In addition, Microsoft's access to the GitHub community and developer knowledge will be the basis for continuously increasing the position of Azure over the competition. And this is well worth a whole lot more than $7.5bn.