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

The "Luddite" Complex
Sometimes simplest is best and sometimes "modern" is designed not with the buyers' interest in mind
SCO's Darl McBride Dead at Age 64
There's hardly any information about it, except we know he reached bankruptcy and 3 years later he died at a relatively young age
[Meme] Python Knows Its Bosses
Microsoft strings attached
[Meme] Debt of About $20 Per Active User
Facebook isn't laying off tens of thousands for "efficiency" but for survival
 
Links 02/11/2024: Many Fakes in Social Control Media
Links for the day
GNU/Linux Usage Surveys: Up to 6.8% (With ChromeOS, Based on StatCounter) in Desktops/Laptops and Above 2% in Steam
Today StatCounter starts releasing graphs based on data for November
Gemini Links 02/11/2024: Petscop, Jokes, and RetroChallenge
Links for the day
Links 02/11/2024: Temu EU Probe and Shorts Trademark
Links for the day
The 'Turning-Free-Code-Proprietary Foundation' (Linux/Microsoft Foundation)
LF will basically become just as sinister as its corporate sponsors
Python Software Foundation is 'Cancel Culture' Rehomed
Python isn't grassroots and it doesn't really tolerate grassroots
DeVault "Closes Down His Mailing Lists Every Time There's a Scandal" and Also Censors Messages
Censorious code hosting platform
What Social Control Media Really Is
Social Control Media, in a nutshell, isn't just bad if its controller is some foreign or hostile nation
Taking Ethics Lectures From Drew
Projection tactics
Links 02/11/2024: Facebook Stock Falls (Soaring Debt), Apple’s Quarterly Profit Down
Links for the day
Gemini Links 02/11/2024: Burnout, Emacs Bookmarks, and Smooth Migration
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Friday, November 01, 2024
IRC logs for Friday, November 01, 2024
Facebook's Debt Has Soared to All-Time High of Nearly 50 Billion Dollars
But the corporate media pretends all is well (while mass layoffs continue and slop takes over the social control media)
Geminispace Makes It Past 4,200 Capsules on November 1st
At last!
Links 01/11/2024: Election Interferences by X/Twitter/Musk, Strava as Espionage Tool
Links for the day
The October 2024 Web Server Survey Shows a Further Collapse for Microsoft in the Servers Market
Microsoft experienced the next largest loss of 699,464 sites (-3.45%)
Gemini Links 01/11/2024: TLS Sucks, twytere.com Announced
Links for the day
Links 01/11/2024: Few Things Are Cheaper Than This Antenna and "Nothing Lasts Forever"
Links for the day
Technology: rights or responsibilities? - Part V
By Dr. Andy Farnell
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Thursday, October 31, 2024
IRC logs for Thursday, October 31, 2024
R.T.O. is Another Name (or Acronym) for Voluntary Layoffs
Amazon is trying to get many workers to leave on their own
Microsoft's Acquisition of Activision (to Fake Revenue Growth by Buying Revenue) Was a Failure
Of course the mass layoffs at Microsoft aren't just a Microsoft thing
Stagnant, Shrinking Businesses and "IBM's Corporate Culture Since the Late 1980s... Over 35 Years."
Recently, IBM was using share price as a talking point, insisting the company was doing OK while tens of thousands were being laid off
Links 01/11/2024: World News, Political Catchup
Links for the day
[Meme] Probably the Worst Possible Time to Get Information From Social Control Media
Musk does not want to prevent disinformation from spreading and the same is true for Facebook and TikTok; they have their own interests
Update on Litigation Against the European Patent Office (EPO) at the ILO Administrative Tribunal (ILOAT)
Rewards and compensation for staff have long fallen, resulting in many experienced colleagues leaving and causing further declines in quality and compliance
Gemini Links 31/10/2024: NNCP, Declutter the Web, Cost of Community
Links for the day
Links 31/10/2024: Supermicro Plummets 33%, Block and Dropbox Mass Layoffs
Links for the day
Links 31/10/2024: Environmental Anxiety, Profound Changes in Hardware Market
Links for the day
Links 30/10/2024: TSMC Concerns and North Koreans in Ukraine War
Links for the day
Facebook is for Zombies
Social control media is for fools
Microsoft Now Has $235,290,000,000 in Liabilities, They Grow Over Time in Spite of Mass Layoffs (So Expect More Layoffs)
expect more mass layoffs
Links 31/10/2024: DST Woes, War Updates, Amazon RTO Backlash
Links for the day
Gemini Links 31/10/2024: Attention Economy and Gemlogs
Links for the day
Happy Halloween
October is nearly over
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Wednesday, October 30, 2024
IRC logs for Wednesday, October 30, 2024
For the Record: Linux is Controlled by the United States of America
"This is going to make many question the openness and inclusivity of the work done by Linux Foundation"
Microsoft: XBox Hardware Revenues Down About 30% (Ignore the Buzzwords and Activision Activity Dressed Up as "XBox")
For context, in a previous quarter XBox hardware sales were down by about 50%
Cooking the Books With "Cloud" And "AI" Was Not Enough to Fool Microsoft Investors
"Microsoft Shares Drop on Disappointing Azure Growth Forecast"