MicrosoftGitHub Purchases Huge Price Tag Belies Big Competitive Worries

Microsoft-GitHub Purchase’s Huge Price Tag Belies Big Competitive Worries

In 2006 Google’s acquired YouTube for $1.65 billion, and Facebook acquired Instagram for $1 billion in 2012.   Many dismissed these purchases as indulgences of cash-rich tech behemoths, and federal regulators took no action.  But, these acquisitions were far from frivolous.  They shut out potential competitors, strengthening Google’s market dominance in search and Facebook’s in social media.

And, now Microsoft’s $7.5 billion acquisition of GitHub repeats the pattern.  GitHub is a software company that few people have ever heard of, but on which programmers, developers, and techies depend.  The price tag, which is approximately 30 times GitHub’s annual recurring revenue, suggests that something other than GitHub’s profitability motivates Microsoft acquisition. Indeed, we think than Microsoft could use the...






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