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A Blockchain Perspective On Microsoft's $7.5B Purchase Of GitHub



De Silva

The deal could shake up how blockchain and Ethereum developers choose to collaborate. Andreessen Horowitz wins big.

On June 4, 2018, Microsoft announced its plan to purchase software development platform GitHub for $7.5 billion in Microsoft stock. The deal, which is subject to regulatory approval in the US and European Union, is expected to close by the end of 2018. This marks Microsoft's largest acquisition since it bought LinkedIn for $26.2 billion in 2016.

Today, Microsoft explained its vision for the GitHub acquisition:

"Together, the two companies will empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsoft's developer tools and services to new audiences."

Microsoft CEO Satya Nadella remarked, "We recognize the community responsibility we take on with this agreement and will do our best work to empower every developer to build, innovate and solve the world's most pressing challenges." It's worth noting that GitHub boasts a community of 28 million developers and 85 million code repositories, and Microsoft claims to be the "most active organization" on the platform.

Personnel Changes

Once the acquisition is complete, Nat Friedman (now corporate vice president at Microsoft and founder of Xamarin) will become CEO of GitHub. Meanwhile, Chris Wanstrath – who stepped down as GitHub's CEO in August 2017 – will become a technical fellow at Microsoft. Both will report to Microsoft's Cloud + AI Group executive vice president Scott Guthrie.

Even though Microsoft is bringing GitHub into the fold, it appears that there will be some degree of separation. If true, this would be a welcome relief, especially given the demise of CodePlex (another service for hosting open source software repositories, which Microsoft shut down last year).

Today, Friedman penned a blog post to allay fears about Microsoft's expanding reach:

"I understand that there is some healthy skepticism in the community, so I wanted to be absolutely clear about two things:

  • GitHub will operate independently as a community, platform, and business. This means that GitHub will retain its developer-first values, distinctive spirit, and open extensibility. We will always support developers in their choice of any language, license, tool, platform, or cloud.
  • GitHub will retain its product philosophy. We love GitHub because of the deep care and thoughtfulness that goes into every facet of the developer's experience. I understand and respect this, and know that we will continue to build tasteful, snappy, polished tools that developers love."

He added, "I'm not asking for your trust, but I'm committed to earning it."

Note: Friedman will be hosting an Ask Me Anything ("AMA") on reddit sometime in the next few days.

Broad Misconception

In the blockchain development community, which relies heavily on GitHub, there has been a touch of confusion about what Microsoft's acquisition means going forward. But just because the corporate giant gobbled up the software development platform, that doesn't mean the sky is falling.

First, GitHub will not disappear overnight (please don't make me look stupid, Microsoft).

Second, contrary to popular belief, GitHub isn't the be-all and end-all for open source code collaboration. On the Ethereum subreddit, a user explained the key differences between Git and GitHub:

"Git is still alive and well as an open source version control system. GitHub is a private company that built its business model on git software … it's relatively trivial to leave GitHub and use git with another provider..."

Note: For those interested in an explanation with additional historical and technical information, check out this post on Quora.

The user ominously added, "Before you defend Microsoft, remember that their only responsibility is to benefit shareholders, not to foster the open source community."

So, GitHub isn't an absolute necessity. There are other options, including GitLab and BitBucket. Already, GitLab has experienced a huge influx of users who appear to be importing their GitHub repositories, according to Bleeping Computer.

Also on the Ethereum subreddit, one user who claimed to be a Microsoft employee said they did not believe the GitHub acquisition would have any impact on Ethereum developers or development.

"I doubt that Microsoft will attempt to censor their commits/issue discussions, and if that somehow did happen, moving source code to a new Git repository is pretty simple," they wrote.

"I do think that its best for the ecosystem to have code/issues/releases spread across multiple providers to ensure that Ethereum development/patch releases aren't blocked due to a single-provider outage," they continued. "It would be really cool if the EF [Ethereum Foundation] built something like what Mango was supposed to be ( I would love to see Ethereum's code hosted on an Ethereum/IPFS platform, especially if it was running a separate network run by the development community."

Questions Remain

Apart from regulatory intervention (or perhaps Presidential tweets), it seems that little can slow corporate expansion. But analysis and oversight of monopolies are topics for another day.

Today, Microsoft's purchase of GitHub should breathe life into important debates about centralization in Ethereum's development community. Should the Ethereum Foundation run its own Git servers? Will the project shift to another collaborative platform? What are the alternatives?

The community must continuously hash out these issues. Unfortunately, the Foundation did not immediately reply to a request for comment.

Just one final note: With Microsoft's acquisition of GitHub, venture capital firm Andreessen Horowitz made a significant exit. The firm invested $100 million in GitHub way back in 2012.

This exit merits a moment of reflection because Andreessen Horowitz has been an important presence in discussions about potential regulatory exemptions for blockchain and cryptocurrency projects. Last month, ETHNews revisited a CFTC podcast episode that featured a conversation with one of the firm's general partners, Alex Rampell, who spoke about blockchain technology and initial coin offerings.

At the time of writing, MSFT was trading for $101.56 per share, while ETH was trading for $592.29 per unit, according to CoinMarketCap.

Matthew De Silva

Matthew has a passion for law and technology. He graduated from Georgetown University, where he studied international economics and music. Matthew enjoys biking and listening to tech podcasts. He lives in Los Angeles.

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