Microsoft has announced that it would buy privately held code repository site Github Inc for $7.5 billion in an all-stock deal. The deal is expected to close by the end of the year, subject to regulatory approval in the US and EU.

Founded in 2008, Github is built on Git, an open source version control software (a software that keeps track of all changes made to a piece of code across multiple versions) created originally by Linux creator Linus Torvalds. Git is a distributed version control system which means each developer has their own code repository that they make changes to, and these changes can be propagated between repositories to share those changes. GitHub provides a repository hosting service: a place to put those repositories so that other developers can readily access them. The whole system essentially encourages an open, community software building process.

Why Microsoft is buying Github

As Microsoft explains in its blog post announcing the acquisition,

The era of the intelligent cloud and intelligent edge is upon us. Computing is becoming embedded in the world, with every part of our daily life and work and every aspect of our society and economy being transformed by digital technology.

Developers are the builders of this new era, writing the world’s code. And GitHub is their home.

Microsoft has lately been working extensively on open source software, which is a pleasant turnaround from their solidly proprietary software-based reputation. And Github is the motherlode of open source code; in fact, it’s an integral part of the global open source ecosystem. As such, Microsoft’s own products, like the enterprise cloud computing services (Azure) it sells aside from its Windows operating system, will benefit from the purchase.

As the cloud computing industry grows exponentially, tech majors like Microsoft and Amazon who are at the forefront of that explosion will be more and more interested in playing a bigger role in the actual code development that drives this growth. How Microsoft will wield its ownership of Github — and the millions of developers that comes with it — will go a long way in determining how successful they will be, and how important Github will remain.