Business Technology

Friday 17 August 2018

Microsoft goes back to its coding roots with $7.5bn deal for GitHub

Microsoft chief executive Satya Nadella
Microsoft chief executive Satya Nadella

Dina Bass

Microsoft said it reached an agreement to buy GitHub, a code repository company popular with many software developers, for $7.5bn (€6.4bn) in stock.

The deal will add to Microsoft's operating income, including some costs, in its fiscal year 2020, the company said in a statement yesterday. Microsoft expects the deal to close by the end of 2018. The shares were up less than 1pc to $101.32 in early trading in New York.

The acquisition provides a way forward for San Francisco-based GitHub, which has been trying for nine months to find a new chief executive officer and has yet to make a profit from its popular service that allows coders to share and collaborate on their work.

It also helps Microsoft, which is increasingly relying on open-source software, to add programming tools and tie up with a company that has become a key part of the way Microsoft writes its own software.

GitHub will operate independently and named former Xamarin CEO and current Microsoft developer tools executive Nat Friedman as its chief.

It will continue to support the programming languages, tools and operating systems of the user's choice.

For Microsoft, acquiring GitHub is both a return to the company's earliest roots and a sharp turnaround from where it was a decade ago.

Microsoft's origin story lies in the market for software- development tools, with co-founders Bill Gates and Paul Allen focused on giving hobbyists a way to program a new micro-computer kit.

But that vision of software tools was applied very differently under both Mr Gates and former CEO Steve Ballmer, who championed developers building proprietary software for Microsoft, not the kind of open-source projects found on GitHub.

Open-source software allows developers to tinker with, improve upon and share code - an approach that threatened Microsoft's business model.

A lot has changed since then, and under current CEO Satya Nadella, Microsoft is supporting many flavours of Linux.

It has used open-source models on some significant cloud and developer products itself. (Bloomberg)

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business