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). ...(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 |
"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:
Censorship power (the implicit threat thereof).
Blackmail - the implicit or explicit threat of loss of service or censorship.
Manipulatively granting some projects preferential treatment or services.
Behavior manipulation and opinion modification – through GitHub site messaging and marketing.
Outright (direct) monetization.
"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. ⬆