GitHub’s $7.5 Billion Acquisition: Microsoft’s Latest Backing of Open-Source Software

Microsoft will purchase Github, the code repository platform, for $7.5 billion in stock. Microsoft expects to complete the deal by the end of 2018. This sale comes after GitHub’s most recent valuation in 2015 of $2 billion. GitHub, founded in 2008, serves as an easily accessible open-source  platform that allows coders to share and collaborate with each other to create and modify software. Writing on Medium, Khalil Khalaf says that through allowing developers to continuously work together to adapt and customize their code, open-source products can be adapted to meet an individual or company’s needs, often at a lower cost than their commercially produced competitors.

Other stated pros of open-source software include that it nearly eliminates the need for license compliance while still maintaining high reliability. By increasing accessibility for coders, consumers are able to benefit from increased market competition and technology that is more quickly produced, released, and regularly improved upon. Microsoft’s acquisition serves as the latest push towards promoting the shared economy; however, some developers and consumers are concerned about the acquisition.

Prior to the deal, Microsoft served as GitHub’s top contributor. Additionally, Bloomberg reports that GitHub has been used to store numerous corporations’ corporate code– including Microsoft rivals such as Google.

As reported in MIT Technology Review, many questioned Microsoft’s motive for apparently overpaying given GitHub’s most recent valuation and its current inability to turn a profit. According to MIT Technology Review, coders have already begun to express apprehension as some fear Microsoft will turn it into a pay-to-play service, and therefore limit the accessibility GitHub prides itself on. An example of the consternation felt among some developers could be seen as individuals on Twitter began to share their reactions:

According to MIT Technology Review, some developers are also worried that Microsoft will soon somehow influence how GitHub operates for its own advantage, as well as discourage competitors from utilizing the platform and engaging with its volunteer coding community. GitHub had developed a near monopoly within the open-source market; however, many are concerned that coders and large companies alike will switch platforms. Through overseeing all projects on the site, Microsoft may develop an unfair advantage in potentially being able to stifle innovation beneficial to its competitors. Many developers believe that GitHub should remain an independent entity to better allow coders to continue to gain firsthand experience in improving and solving problems with Microsoft’s rivals’ code.

MIT Technology Review reports Microsoft’s competitors, such as Google and Facebook, would likely be afraid to utilize GitHub’s talented volunteer community. Microsoft’s oversight may ultimately be detrimental to consumers as GitHub loses stability while Microsoft’s competitors and coders turn to less developed collaborative platforms.  Microsoft’s competitors could switch to GitHub’s competitors in order to not lose full access to volunteer coders that often helps to expose and correct technical failures that can lead to upcoming privacy data breaches if unchecked. Since the news of the acquisition, rival BitBucket and GitLab have already seen a large influx of traffic.

Ars Technica asserts “Everyone complaining about Microsoft buying GitHub needs to offer a better solution” and tells readers that GitHub needed to be purchased given its significant debt. Ars Technica then states that only Google, Amazon, Facebook, IBM, Oracle, and Apple were capable of making such a sizable purchase. Ars Technica further employs that Microsoft is the most natural option given it was already “migrating much of its development to Git. [Microsoft] has had to modify Git to handle the scale it needs, but it is working with the Git developers to get these modifications accepted into the main Git codebase, with the intent being that, eventually, stock-standard Git will do everything the company requires. Microsoft and GitHub have also collaborated to bring support for these extensions to GitHub and non-Windows platforms.”

Microsoft’s support of GitHub and open-source programs has also drawn concerns within the commercial software industry and has proven difficult for consumers used to traditionally created products. Due to its creation by numerous volunteer coders, open-source software lack the extensive tech support that is often needed when first encountering an issue. Volunteer coders can be responsive but are not paid employees who are able to directly engage with consumers. Coders are unable to be easily reached via phone or email unlike companies with a devoted consumer helpline.

Often a consumer of an open-source software will have to wait until a sufficient number of coders become aware of a bug before one works to resolve the issue. Additionally, since numerous coders without a direct connection to each other often develop open-source products, this software is often not as user-friendly as commercially produced rivals. Often open-source products are not as intuitive or aesthetically pleasing as products that a company with a cohesively constructed vision and an implemented Graphical User Interface (GUI) has created.

Microsoft’s purchase ultimately serves as an additional nudge towards the continued market expansion and proliferation of open-source software. Only time will tell whether or not open-source software is ultimately in the best interest of consumers. Microsoft’s purchase will likely either further solidify or dissolve GitHub’s prior near monopoly, time will tell whether a decentralized open-source network will lead to the greatest innovation and efficiency.

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