On Monday, Microsoft confirmed that it has acquired the popular coding site GitHub for $7.5 billion. But the tech giant was not the only one that courted GitHub. Google wanted to buy the open-source platform as well.
Sources familiar with the deal believe that the decision to choose Microsoft was spurred by the relationship between Microsoft’s CEO Satya Nadella and GitHub founder Chris Wanstrath and Microsoft being the higher bidder.
Google had been in talks with GitHub for multiple weeks, but Google’s parent company Alphabet Inc couldn’t match Microsoft’s takeover bid. In the past, other companies had tried to buy the code-sharing service, including e-commerce giant Amazon.
Microsoft’s final offer was 25 times revenue for the platform which amounts to $300 million in revenue per year.
After Windows unit got behind the cloud service unit, Microsoft has been courting developers like there’s no tomorrow. Now that it has two of the most prominent professional networks, GitHub and LinkedIn, it could gain an edge in the search for tech talent. The two services combinedly cost Microsoft $26 billion.
Many Companies Have Expressed Interest in the Coding Site
Wanstrath has not monetized the service to the max because he wanted to offer entry-level developers free coding tools. Wanstrath has been very close to Nadella since the Microsoft CEO has backed open-source software to help Microsoft grow and lure in more developers.
Microsoft has been exploring an acquisition of GitHub for years, but the coding platform had repeatedly refused its offers. Amazon, Google, Australia-based Atlassian, and China-based Tencent were also rejected.
“[GitHub] had lots of options. There’s a real strategic fit at Microsoft,” said analyst Peter Levine from Andreessen Horowitz.
In 2012, Andreessen Horowitz poured $100 million in the coding website, which was the “largest single check” the venture capital firm had ever written. Three years later, a second funding round valued the code-sharing service at $2 billion.
Image Source: GitHub