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Microsoft Acquires GitHub for $7.5 Billion

GitHub founders now own more of Microsoft than its CEO. The software platform has been purchased by Microsoft for $7.5 billion. The all-stock transaction represent 73.8 million in Microsoft shares. Assuming GitHub’s founders (there are four in total) have the same level of controlling equity, the deal would leave them owning about 12.3 million shares each. Only Bill Gates will own more of Microsoft. According to Bloomberg data, the acquisition would make GitHub’s founders billionaires: Chris Wanstrath, Tom Preston-Werner, Scott Chacon and PJ Hyett.

Chris Wanstrath (left), Github CEO and co-founder; Nat Friedman, Microsoft corporate vice president, Developer Services; Satya Nadella, Microsoft CEO; and Amy Hood, Microsoft Chief Financial Officer. Photo Credit: Official Microsoft Blog

“Every business is a software business… developers are going to be required everywhere… that’s the real strategic rationale for it,” Satya Nadella, the CEO of Microsoft explained on CNBC. Later adding, “It’s a secular growth market. And Microsoft has heritage here. We were a developer tools company first.”

For the past several years, other corporate giants (including Amazon and Google) have tried to lure GitHub. And for a good reason: over 28 million developers around the world use the platform. Organizations and businesses of all sorts trust GitHub with their data. Companies like Spotify, PayPal, Airbnb, Slack and GroupOn treat GitHub like their own corporate extensions. It has become the industry standard for software collaboration and project-based learning. Even NASA’s Jet Propulsion Lab depends on GitHub.

Not everyone is happy. GitHub is an open source platform. Some users fear that Microsoft’s purchase will lead to the erasure of the platform’s soul. On Twitter and Reddit, many developers have greeted the news with either skepticism (in the form of hilarious memes) or outright switching their repositories to rival sites like Gitlab.

Photo Credit: The Verge
Photo Credit: @4w4r44 / Twitter

GitHub has never turned a profit. Despite this glaring fact, its founders have remained protective of the platform’s open source culture and provision of free programming tools. GitHub was first backed by Andreessen Horowitz in 2012 with an initial investment of $100 million. And then again in 2015, Sequoia Capital led the company in raising a $250 million funding roundA return on investment had to be made at some point. It was only a matter of time. When the deal officially closes later this year, co-founder Chris Wanstrath will step down as CEO and become a technical fellow at Microsoft. The new GitHub will be led by Nat Friedman, founder of Xamarin (acquired in 2016 by Microsoft) and a longtime open source advocate.

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