According to the news report by Reuters, the European Union’s antitrust regulators are going to decide on October 19 whether Microsoft’s $7.5 billion acquisition of the privately owned coding website company GitHub should be allowed or not.
Microsoft has been looking at buying out GitHub so that it can beef up its cloud computing business against its serious rival, Amazon Web Services. The technology giant had requested the European Union antitrust regulators to approve this deal via a filing last week on Friday, which showed up on the European Commission’s website on Monday.
The European Union antitrust enforcer, which ensures fair competition within industries and markets, can do one of the following. It can either give Microsoft the approval to go ahead with the acquisition with or without conditions attached or, if it has concerns that antitrust laws could be violated, can open a full-scale investigation into the entire deal.
GitHub is the biggest code host in the world, with more than 28 million software developers using its coding platform. It also has 85 million repositories on its coding platform and is also used by more than 50% of the Fortune 50 companies across the globe.
And if Microsoft does get approvals for this acquisition, it will be the tech giant’s biggest takeover since it acquired LinkedIn in 2016 for a sum of $26 billion.
The biggest worry that antitrust regulators may have is that if Microsoft acquires GitHub, then the code host would end up favoring Microsoft products over others’. This is a fear that even users of GitHub have expressed.
The Chief Executive Officer of Microsoft Corp. Satya Nadella has tried to allay these fears by stating publically that even if Microsoft were to take over GitHub, the code host would remain the open platform that it currently is and will continue to work with all the public cloud services in the market.
According to The Register, these concerns may lead to the European Union’s regulators putting some stringent conditions on this acquisition. However, Microsoft has faced antitrust regulators in Europe before when it was planning to buy out LinkedIn.
At that time, the tech giant was able to calm the European regulators’ fears by vowing now to force PC manufacturers to pre-install LinkedIn or even exclude competitors from its Office Suite. Microsoft also promised that it would allow everyone access to its Microsoft Graph.
Microsoft had first announced its intention to buy GitHub earlier this year in June, offering the $7.5 billion dollars and the hope that the deal would be closed by the end of this calendar year.
This deal raised eyebrows everywhere, since the tech giant’s offer is about 30 times the value of GitHub’s yearly recurring revenue. Even the massive deal with LinkedIn for $26 million was just 7.2 times the online business and employment oriented service platform’s yearly recurring revenue.
This deal would actually be a life saver for GitHub, which is reportedly losing money alarmingly fast. However, at the price that Microsoft has offered for the code host, the market expectation is that Microsoft is expecting huge returns on its investment.
The only time that Microsoft was able to get regulatory approval from the European Union was during its unfortunate buyout of Nokia, the Finnish telecommunications, technology and consumer electronics conglomerate.
This time round, the market expectation is that Microsoft will be expected to promise that it will not try to force its customers to use GitHub and will not prevent its competitors from trying to integrate into the Visual studio network.