This post co-authored with my esteemed colleague and Gartner Vendor Lead for Microsoft, Ed Anderson.
Microsoft, already a significant contributor to GitHub, and a frequent contributor to open source over the past several years, doubled down this week. It decided to use some stock from its share buyback program to make a “$7.5B” deal to acquire GitHub and place Nat Friedman at the helm. Friedman, a long-term champion of Linux and open source and well-known luminary in open source communities, joined Microsoft when it acquired his company, Xamarin, in 2016.
Friedman’s credibility will help a good deal. Microsoft’s interest is in further elevating its open source profile; there is already a lot of skepticism from developers. But developers are part of Microsoft’s DNA – it has always been a company for developers, and the growth of open source communities in the internet era offers an opportunity to revisit and re-energize that aspect of its profile. While it has had mixed results in some of its acquisitions over the years, its ownership of LinkedIn has produced subscriber growth and revenue growth, while maintaining an effectively open environment. Its ability to bring some stability to GitHub and provide the needed resources to help it grow make for a powerful opportunity.
Microsoft has not articulated how it will make money through this acquisition, although it is consistent with the need to attract developers to the Azure platform. Microsoft has hinted at plans to increase the connection between GitHub and Azure – although they’ve said any features would be open to any platform, further broadening the story.
The deal is subject to US and EU regulatory approval, which Microsoft expects by the end of 2019. In the meantime, Microsoft will have to demonstrate to the developer community (communities) that GitHub remains a safe and trusted environment to build and managed code.