Bonum Certa Men Certa

GitHug - A Guest Article by Thomas Grzybowski

Losing money in exchange for control

Fake happiness



Summary: "Now, if Azure revenue has increased 72%, but the gross revenue in this category has only increased 25%, that means that the other components, primary GitHub, are actually a substantial negative."

L

et’s call it “GitHug”, because Microsoft Loves Linux. And Microsoft loves Linux so very much that they have systematically gone about obtaining a grip on almost all of the myriad threads that support the Linux-based software ecosystem. It’s taken years, and billions of dollars, but Linux is worth the investment. A recent article by figosdev: GitHub is Moving the Free Software Movement Into “Check” has detailed the vast and deep dependency that GNU/Linux distributions, development software, and applications software already have upon Github. What is going on here?

First, let's take a quick look at the investments we are talking about:

From the Microsoft Annual Report, 2019, https://www.microsoft.com/investor/reports/ar19/index.html

GitHub, Inc.

On October 25, 2018, we acquired GitHub, Inc. (“GitHub”), a software development platform, in a $7.5 billion stock transaction (inclusive of total cash payments of $1.3 billion in respect of vested GitHub equity awards and an indemnity escrow). ...

The allocation of the purchase price to goodwill was completed as of June 30, 2019. The major classes of assets and liabilities to which we allocated the purchase price were as follows:

(In millions)
Cash, cash equivalents, and short-term investments $ 234
Goodwill 5,497
Intangible assets 1,267
Other assets 143
Other liabilities (217)
Total $ 6,924


Note this amazing fact – Microsoft credits only 143 Million dollars to “other”, presumably tangible assets, and 5.5 Billion Dollars to “Goodwill”. That is indeed quite a lot of “Goodwill” - but where is real value derived from the Goodwilling? I’ll take a look at that later. First, here are a few more very interesting facts from the same Annual Report:

First, the note that “Server products and cloud services revenue, including GitHub, increased 25%, driven by Azure growth of 72%.” Now, if Azure revenue has increased 72%, but the gross revenue in this category has only increased 25%, that means that the other components, primary GitHub, are actually a substantial negative. Here are some of the negatives, costs, which are listed:



Clearly, Microsoft is carrying very substantial annual costs associated with the promotion and maintenance of GitHub.

Just one other note regarding the great Love that Microsoft has for Linux: The amount that Microsoft pays annually for Platinum membership in the Linux Foundation is $500,000. per year.

Therefore, we are talking hundreds of thousands, no millions, no Billions of dollars that Microsoft is spending in the arena of Linux and Free and Open Source Software, primarily upon GitHub. This is absolutely not charity. Microsoft is a profit-making corporation, and is legally responsible for maximizing shareholder value and shorter-term financial returns. So, what is their rational to justify these tremendous expenses?

"This kind of positive feedback loop, the “Network Effect”, is notorious for creating vendor lock-in. Microsoft is of course a master in this tactic."Microsoft explains: “In a world where every company is a digital company, developers will play an increasingly vital role in value creation and growth across every industry, and GitHub is their home. Since our acquisition of GitHub last fall, growth has accelerated. Today it’s used by more than 40 million developers.”

Now we have a glimpse of what Microsoft is after: 40 million developers, and growing. As more people increasingly turn to Github for development and code resources, the value to Microsoft of each GitHub user (and secondarily to each user) increases in a geometric function as each new user joins in. This kind of positive feedback loop, the “Network Effect”, is notorious for creating vendor lock-in. Microsoft is of course a master in this tactic.

Further, more specifically, where is the value derived? Microsoft is investing heavily in expanding it’s control over the myriad threads that support the Linux-based software ecosystem, and it is a truism that functional control is tantamount to ownership. But what monetary gain can they then wring out of this control, this partial ownership?

"Also importantly, the source code and other content itself physically resides on Microsoft’s servers."Perhaps most importantly, Microsoft gains a real-time handle on the activities and relative activities of tens of millions of identifiable developers along with the many more interested parties who frequent their GitHub site. This surveillance and intelligence-gathering is invaluable in the creation and assessment of their corporate strategies.

Also importantly, the source code and other content itself physically resides on Microsoft’s servers. These materials are then open to easy and extensive analysis for technical and strategic information.

There are a number of other real and potential benefits emerging from having the source code and other content itself physically reside on Microsoft’s servers which Microsoft can use at its discretion:

  1. Censorship power (the implicit threat thereof).

  2. Blackmail - the implicit or explicit threat of loss of service or censorship.

  3. Manipulatively granting some projects preferential treatment or services.

  4. Behavior manipulation and opinion modification – through GitHub site messaging and marketing.

  5. Outright (direct) monetization.

The surveillance aspect is probably of the most valuable to Microsoft right now; and it is also the most difficult us to get a handle on. We do not know how they are using what information to develop and adjust their corporate strategies. This is the realm of business secrets.

Censorship will be a tricky one for them. Currently there are incidents where they just pass the responsibility right back to the originator of the request. Potentially they can use the threat strategically, perhaps though proxies - which leads us to "blackmail".

"Censorship will be a tricky one for them. Currently there are incidents where they just pass the responsibility right back to the originator of the request."As for "preferred services", that’s already part of the deal - you have to register your personal information with GitHub in order to get the full service. And they also sell a range of services to businesses. And in fact it is documented that there are areas of functionality where, if you have not registered with them, you can run into obscure "technical" difficulties (I have).

Directly charging people for more basic services on GitHub is probably a ways off, since they are now focused on roping people in. But when GiHub has a solid monopoly in its domain this becomes a distinct possibility.

Because Microsoft loves Linux so very much, they have taken a hug on the entire GNU/Linux ecosystem, and on us. As the hug becomes tighter, it will likely become a more abusive relationship. We will be shaken.






Authored by Thomas Grzybowski | Attribution-ShareAlike, CC BY-SA

Recent Techrights' Posts

Trying to Silence Techrights Was a Huge Mistake
Peter Thiel attacked a publisher for asserting, correctly, that he was gay. Now everyone knows it.
The Register Bill
The Register MS - putting the "MS" in your centre of the universe
 
Certificate Authority Let's Encrypt Has Almost Gone Down to Zero, Nearly Totally Extinct in Geminispace, the Few Capsules Still Using It Are Spam/Dead/Stagnant
This represents another decrease for Let's Encrypt; the last decrease was last week
Not Much Left in News Cycles
To be very clear, this does not describe "Linux" anything; it's true in just about every facet of news, except the paid-for fake "journalism" about "hey hi" (sites getting paid explicitly to maintain or rekindle hype)
Throwing Away "Old" Computers (Mozilla and Other Climate Deniers)
Mozilla is not leftist
The UEFI 9/11 - Part VIII - Denial of Service and Selling Us WSL (Windows) Instead of "Risky" (Prone by Breakage by Microsoft) GNU/Linux
Restricted Boot (so-called 'SecureBoot') does not improve security. It is nothing but trouble. It's meant to trouble non-Windows users. In dual-boot setups, SecureBoot is a recipe for disaster because Microsoft keeps erasing or tampering with the boot sector, to paraphrase an associate
Slop is Extremely Rare in Geminispace, Slop Images Are Unheard Of (Despite Images Being Supported)
As long as Geminispace grows in terms of domains it's safe to predict the protocol will still be used in 2029 and hence Geminispace will turn 10
Links 07/09/2025: Robodebt Class Action, Fines, and Copyright Settlement
Links for the day
Links 07/09/2025: Yle Impersonated in Social Control Media, Boat-Attacking Orcas, Midjourney Sued Again
Links for the day
Slopwatch: LinuxSecurity, Linux Journal, and the Serial Slopper
Google won't tackle the issue because Google participates not only in relaying slop but also in generating lots of it
Links 07/09/2025: Google Fines in EU and "Your Internet Access Is at Risk"
Links for the day
Gemini Links 07/09/2025: Little Brother and Corporate Theatre
Links for the day
Links 07/09/2025: More Harms of Slop and Anthropic's Nightmare Scenario (Huge Legal Liabilities for Slop)
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Saturday, September 06, 2025
IRC logs for Saturday, September 06, 2025
Microsoft Sites Now Talking About September's Mass Layoffs at Microsoft
It's noteworthy that even Microsoft's MSN now covers the latest revelations about mass layoffs
Gemini Links 06/09/2025: SpellBinding Moving and "The Cloud" Ridiculed
Links for the day
Slopwatch: On "the Apology Industry", Chatbots (Punchbag for Customers), and Fake Articles About "Linux"
"news reporting priorities changed"
Links 06/09/2025: "Covid Incidence on the Rise" and Many Attacks on the Press Worldwide
Links for the day
Analogies for "Memory Safety" in Rust
Don't worry, it's Rust! It can do anything!
Nobody Denies That SecureBoot Will Cause Problems After September 11
Not even Microsoft
Gemini Links 06/09/2025: Infinite Scrolling and Posting from Emacs
Links for the day
Links 06/09/2025: GitHub Meltdown Over Slop, "U.S. Jury Says Google Should Pay $425 Million in Privacy Lawsuit"
Links for the day
Despite Its Severe Financial Problems Gnome Foundation Inc Paid Rosanna Yuen Over 100,000 Dollars Last Year
maybe relocation should be considered
The "Left" and the Right"
It poisons everything
Mozilla and Rust Are Not Leftists
they're part of the mass consumerism machine
Disposable to Microsoft
There is an extensive set of people who got used by Microsoft, only to be thrown away a month later or a year later or a decade later
The UEFI 9/11 - Part VII - This Coming Week Many PCs Will Refuse to Boot "Linux" (Because of Microsoft's Expired Certificate)
The real solution is, disable "secure boot" or "SecureBoot" while it's still possible. [...] Just like submarine patents, a lot of this problem was "hibernating" for a while
The Thing Nobody in Red Hat Wants to Talk About Openly
There is a real sentiment or worry among Red Hatters, Europeans and Americans in particulars (because of higher salary expectations)
Slopwatch: Small Parade of Fake News About "Linux" and Scams Borrowing the Name (or Word) "Linux"
In practice, LLMs are a risk
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Friday, September 05, 2025
IRC logs for Friday, September 05, 2025
Genini Links 05/09/2025: Community, ROOPHLOCH, and PITkit
Links for the day
Links 05/09/2025: Vaccine Sceptics Poison the Well, Two Exploited Vulnerabilities Patched in Android
Links for the day
Gemini Links 05/09/2025: Logitech Lift and DIY Gemini Servers
Links for the day
Links 05/09/2025: Sainsbury's Caught Spying on In-Store Shoppers and Microsoft "OpenAI is Using Legal Threats to Harass its Critics"
Links for the day
BASIC Predates Microsoft by Over a Decade, Microsoft-Controlled Sites Like The Register MS Don't Want You to Know This
The state of the media is really bad when it relies a lot on oligarchs' money and is appointing editors who are working for oligarchs
Brian Kernighan, "Only Third to Dennis Richie and Ken Thompson" (UNIX), Agreed With Someone Who Said Rust Was Just Hype, Should Not Replace C
17 hours ago
Reminder: Microsoft's "Secure Boot" Certificate for "Linux" Will be Expired in One Week
Many PCs won't manage to 'rotate' to another certificate
"Many of the Red Hat Employees Are Still Looking for Work"
Shame on IBM's CEO
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Thursday, September 04, 2025
IRC logs for Thursday, September 04, 2025
Microsoft Started With Code Literally From The Trash, Nothing Has Improved Since
The reality is, there are systems and code that are reliable. But they're not Microsoft's.
Hypothesis That New McKinsey/Microsoft Executive Inside Red Hat Will Outsource Research and Development Operations to India (Like They Do in IBM)
IBM is floundering
Slopwatch: Scams, Fake Articles About "Linux", Plagiarism, and Worse
Perhaps some time soon the LLMs or the "Big LLMs" will run out of money (to borrow) and go offline, leaving those slopfarms in a tough place