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Money News

What’s Github and Why is Microsoft Buying It?

June 04, 2018

  • Software giant Microsoft will purchase Github for $7.5 billion
  • Github is an open-source code library used by millions of developers
  • The acquisition could help Microsoft branch out and stay relevant to new users
2 min read

Big news for open-source code developers.

Redmond, Washington-based software giant Microsoft announced Monday it will purchase Github, a storehouse of open-source code, for a reported $7.5 billion.

Microsoft, founded by Bill Gates, is the creator of the Windows operating system (OS), one of the world’s most popular computer software platforms.

Github, founded in 2008, is frequently described as “Google Docs for developers,” allowing programmers around the globe to collaborate on and store software code in a central library. It achieved a valuation of $2 billion in 2015, placing it in the category of so-called unicorns, startups that reach a company valuation of $1 billion or more.

Microsoft’s purchase of Github will allow it to evolve and continue offering new products and services as customers shift to the cloud and demand new ways to access software development services, according to reports.

What is Github?

Github is primarily an open-source repository of more than 85 million pieces of code, reportedly used by tens of millions of programmers.

As opposed to proprietary code–such as the Windows OS–open source code is free and open to any developer to tweak and adapt. One of the best-known open source operating systems is called Linux.

Github’s service is free to most users, but it has an enterprise version for businesses, for which it charges money. Businesses can also combine proprietary and open-source development on Github using private repositories.

Github raised $350 million from prominent venture capital investors including Andreessen Horowitz and Sequoia Capital, according to industry sources.

Microsoft’s purchase of Github will allow it to evolve and continue offering new products and services as customers shift to the cloud and demand new ways to access software development services

Why did Microsoft buy Github?

While Apple frequently gets a lot of attention in the tech world for its own operating system, not to mention its sleek and shiny products that often push the envelope where technology is concerned, Microsoft still has a much larger market share in the computing world.

In fact, Microsoft controls close to 90% of the operating system market. (An operating system is the software brains of a computer, or handheld device, that powers all of the other programs.)

Microsoft has also developed a sizable presence in the cloud computing space. The cloud allows computer users to access programs and storage through a distributed network of computers. Microsoft’s suite of cloud-based products and services includes storage as well as application creation.

In recent years, Microsoft CEO Satya Nadella has attempted to shift the company’s focus away from an exclusive focus on its proprietary operating system to one that includes Linux, according to reports.

“More than 28 million developers already collaborate on GitHub, and it is home to more than 85 million code repositories used by people in nearly every country,” Nadella wrote on Microsoft’s blog Monday. “From the largest corporations to the smallest startups, GitHub is the destination for developers to learn, share and work together to create software.”

Microsoft’s latest expensive acquisition

Although the $7.5 billion price tag for Github may seem like a lot, it’s not Microsoft’s most expensive acquisition–not by a long shot. In 2016, it purchased the social networking site Linkedin for a staggering $26 billion. It also purchased online video service Skype for $8.5 billion in 2011.

With annual revenue of $90 billion, Microsoft is one of the biggest companies in the U.S., ranking number 30 on the Fortune 500 list for 2018.

If investing in the world of technology intrigues you, check out Stash’s exchange traded funds, and single stocks here.


*image is for illustrative purpose only.

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

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