AI Grew Up on Git, Part 5: What $7.5 Billion Actually Bought
In 2018, Microsoft bought GitHub for its developers and its cloud. Three years later, the deal held something nobody had priced: the exact fuel a new kind of AI needed
This is AI Grew Up on Git, a series on the infrastructure that raised artificial intelligence and what AI is now doing to it. Across eight parts it traces how Git and GitHub set the speed and shape of modern AI, and teaches you to read and use Git along the way.
On June 4, 2018, Microsoft announced it would pay $7.5 billion, in its own stock, for a company that had never turned a profit and had spent a decade being the thing open source trusted precisely because Microsoft was not involved in it.
The number alone was a surprise. GitHub had last been priced by private investors at $2 billion, back in 2015. The rumor mill in the weeks before the deal had settled on something closer to $5 billion. Microsoft paid roughly fifty percent above the rumor and nearly four times the last real valuation anyone had put on the company. Whatever Microsoft thought it was buying, it was willing to pay a premium most acquirers reserve for certainty, not for a hunch.
The people changed with the ownership. Nat Friedman, who had sold his own company, Xamarin, to Microsoft two years earlier, took over as GitHub’s CEO. Chris Wanstrath, the co-founder from Part 2 who had built the site’s Rails application on Saturdays over Vietnamese egg rolls, stepped back to become a Microsoft technical fellow, working on strategic projects instead of running the place he’d started. The founder generation handed the keys to the acquirer’s generation, the way it does.
And the open-source world, or a loud and credible part of it, was afraid. The fear had a name, borrowed from Microsoft’s own history: embrace, extend, extinguish, the old accusation that Microsoft absorbed open standards, layered proprietary extensions on top, and let the original wither. GitHub, the home of the culture Part 2 of this series described, the platform that had made forking and pull requests the default grammar of open collaboration, now belonged to the company that culture had spent twenty years keeping at arm’s length.
Microsoft, for its part, seemed almost unaware of the irony sitting in its own announcement. When the acquisition finally closed that October, Nat Friedman published the news under a headline built entirely out of the platform’s own vocabulary: “Pull request successfully merged. Starting build…” The company whose social invention this series has already traced, the pull request that made contributing to someone else’s work feel like a conversation instead of an intrusion, had just used that exact phrase to describe absorbing its own founders into a much larger machine.
What Microsoft said it was buying
Read what Microsoft said at the time, and the reasoning has nothing to do with artificial intelligence.
The press release, filed the same day with securities regulators, framed the deal around developers and cloud. The two companies would, in Microsoft’s own words, “empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsoft’s developer tools and services to new audiences.” Satya Nadella called Microsoft “a developer-first company” and framed the purchase as strengthening “developer freedom, openness and innovation.” On the balance sheet, GitHub would be folded into the Intelligent Cloud segment, the same bucket as Azure.
Read plainly, this was an on-ramp. Microsoft had tens of millions of developers who had spent years ignoring its cloud, and here was a way to put Azure in front of all of them at once, on a platform they already trusted and used every day.
Nowhere in that reasoning is a training corpus, and there is a simple explanation for the omission: in June 2018, nothing existed that could have used one at this scale. GPT-3, the model that would make large language models a mainstream concept, was two years away. Codex, the specific model that would turn GitHub’s contents into a coding assistant, was three years away. The single most valuable thing about this acquisition, from where the industry sits now, was not on the list of reasons Microsoft gave for making it, because the reason had not been invented yet.
This is the same shape this series keeps finding under different names. GitHub’s own founders built a corpus of code and conversation while trying to make collaboration pleasant. Hugging Face built the infrastructure for open models while trying to comfort teenagers. Papers with Code built a map of open research while trying to fix a reproducibility problem. Now the pattern shows up at the scale of a corporate acquisition: Microsoft bought a developer platform and a cloud on-ramp, and years later discovered it had also bought the thing that mattered more.
