Google, Amazon Wanted GitHub Too. Here’s Why It Lost to Microsoft

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Jun 18, 2018
This article is part of a series called Opinion.

Microsoft recently buying GitHub for $7.5 billion was a big deal, with a variety of winners and losers in the recruitment industry. By buying the most valuable online community of software engineers in the world, Microsoft now claims the two most important online professional networks.

To appreciate the appeal of GitHub, think about this: Microsoft reportedly paid 30 times GitHub’s annual revenue, which is nearly five times what it paid for LinkedIn’s back in 2016. A platform that hot most certainly had other suitors vying for it.

Indeed, it did.

A recent story from CNBC says Google was also hot and heavy for GitHub. “The talks for GitHub went on for several weeks, according to several other people familiar with the process,” reported CNBC. “But at the end, the auction was not close, suggesting Microsfot’s bid was high enough to keep Google at bay. GitHub has, in the past, also attracted takeover interest from companies such as Amazon, according to people familiar with the matter.”

Other companies, including Atlassian, which has headquarters in Australia and the U.S., and China’s Tencent were among those that made inquiries into acquiring GitHub in recent years. “There has been interest in GitHub for a long time,” Peter Levine, a partner at the venture capital firm Andreessen Horowitz, which first backed GitHub in 2012, told CNBC. “They had lots of options. There’s a real strategic fit at Microsoft.” Andreessen invested $100 million into GitHub in 2012.

Why GitHub chose Microsoft over Google an be dwindled down to people and vision.

“GitHub founder and former CEO Chris Wanstrath has limited his efforts to make money from the service out of a desire to give free tools to developers, but was drawn to Microsoft because of his relationship with CEO Satya Nadella,” a source told CNBC. “Since taking over Microsoft four years ago, Nadella has embraced open-source software and programmer tools to restore growth and attract third-party developers.”

“Nadella won over Wanstrath in the last 24 months with his vision for GitHub fitting within Microsoft,” CNBC continued. “New CEO Nat Friedman, who joined Microsoft through a prior acquisition, plans to run GitHub independently for the time being.”

We focus on recruitment here at ERE, but this deal had little to do with hiring at its heart. This was about cloud computing. Being able to engage developers and steer more of them into the Microsoft ecosystem is a big deal. Something like that is worth $7.5 billion. Similarly to Salesforce, Microsoft is making big bets by acquiring complimentary businesses. Google, in contrast, seems to be focused on building its own tech.

With regard to employment, losing GitHub to Microsoft is a significant loss for Google. It means Google is 0-3 when it comes to either beating or acquiring the world’s most popular people networks. And since recruiting is about people, that’s no small detail. Google obviously feels confident with what it is building, but I can’t help but think it’ll regret losing out on so many of these types of acquisitions.


This article is part of a series called Opinion.
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