CELEX: 32018M8994
Language: en
Date: 2018-10-19 00:00:00
Title: Commission Decision of 19/10/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.8994 - Microsoft / GitHub) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 19.10.2018
                                                                 C(2018) 7020 final
In the published version of this decision, some
information has been omitted pursuant to
Article 17(2) of Council Regulation (EC)
No 139/2004 concerning non-disclosure of business                         PUBLIC VERSION
secrets and other confidential information. The
omissions are shown thus […]. Where possible the
information omitted has been replaced by ranges of
figures or a general description.
                                                                 To the notifying party:
 Subject:             Case M.8994 - Microsoft / GitHub
                      Commission decision pursuant to Article 6(1)(b) of Council
                      Regulation No 139/20041 and Article 57 of the Agreement on the
                      European Economic Area2
 Dear Sir or Madam,
 (2)       On 14 September 2018, the European Commission ("Commission") received a
           notification of a proposed concentration pursuant to Article 4 of Council
           Regulation (EC) No 139/20043 by which Microsoft Corporation ("Microsoft" or
           the "Notifying Party", USA) acquires within the meaning of Article 3(1)(b) of the
           Merger Regulation control of the whole of GitHub Inc ("GitHub", USA) (the
           "Transaction"). Microsoft and GitHub are hereafter collectively referred to as the
           "Parties".
 1.        THE PARTIES
 (3)       Microsoft is active in the design, development and supply of computer software
           (including various software development and operations ("DevOps") tools),
           hardware devices and related services, cloud-based solutions, online advertising,
           recruiting and professional social network services.
 1     OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on
       the Functioning of the European Union ('TFEU') has introduced certain changes, such as the
       replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of
       the TFEU will be used throughout this decision.
 2     OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
 3     OJ L 24, 29.1.2004, p. 1 (the "Merger Regulation").
 Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
 Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
 Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- (4)  GitHub is active in the supply of DevOps tools and in particular the popular
     source code hosting platform for version control and collaboration on software
     development, for use online ("GitHub.com"), and on-premises ("GitHub
     Enterprise"), and job listing services. As of the time of the notification, GitHub
     has more than 28 million registered users, […] million monthly active users, and
     […] million monthly active contributors. It hosts approximately […] million
     source code repositories, more than […]% of which are public repositories used
     for open source code development.
(5)  Developers can join GitHub and create public repositories, or contribute to open
     source projects in existing public repositories, at no charge. Developers or
     organizations who wish to obtain additional features – such as private
     repositories, support, service-level-agreement guarantees, etc. – must purchase a
     subscription.
2.   THE CONCENTRATION
(6)  Pursuant to an agreement and plan of merger signed on 4 June 2018, GitHub will
     become a wholly-owned subsidiary of Microsoft. As a result, Microsoft will
     acquire sole control over GitHub.
(7)  Therefore, the Transaction constitutes a concentration within the meaning of
     Article 3(1)(b) of the Merger Regulation.
3.   UNION DIMENSION
(8)  The Transaction does not have a Union dimension within the meaning of
     Article 1(2) or Article 1(3) of the Merger Regulation as the EU turnover of one of
     the Parties (GitHub) in the last financial year for which data is available at the
     date of the notification amounted to [less than 250] million.
(9)  Nonetheless, the Transaction fulfils the two conditions set out in Article 4(5) of
     the Merger Regulation since it is a concentration within the meaning of Article 3
     of the Merger Regulation and it is capable of being reviewed under the national
     competition laws of four Member States, namely Austria, Cyprus, Germany and
     the United Kingdom.
(10) On 18 June 2018, the Notifying Party informed the Commission by means of a
     reasoned submission that the Commission should examine the Transaction
     pursuant to Article 4(5) of the Merger Regulation. The Commission transmitted a
     copy of that submission to the Member States on 19 June 2018.
(11) As none of the Member States competent to review the Transaction expressed its
     disagreement as regards the request to refer the case, the Commission deems the
     Transaction to have a Union dimension pursuant to Article 4(5) of the Merger
     Regulation.
                                              2
 ---pagebreak--- 4.     RELEVANT MARKETS
 4.1.  Introduction
(12)   The Parties' activities overlap in DevOps tools. They both offer a source code
       hosting platform for version control and collaboration, as well as code editors and
       integrated development environments ("IDE").
(13)   Moreover, there are several non-horizontal links between the Parties' activities, in
       particular between, on the one hand, source code hosting platforms for version
       control and collaboration and, on the other hand, other DevOps tools and cloud
       services.
4.2.   Relevant markets
4.2.1. DevOps tools
(14)   DevOps tools are tools that organisations and individuals use when performing
       various tasks necessary to develop and release a piece of software. The term
       DevOps is used to convey the fact that the development ("Dev") and operations
       ("Ops") teams are integrated instead of operating in silos.
(15)   Both Parties are active in the supply of DevOps tool. Within DevOps tools, their
       activities overlap in relation to the supply of source code hosting services for
       version control and collaboration and code editors/IDEs.
(16)   Moreover, as various DevOps tools are often used in combination with each
       other, non-horizontal links exists with respect to the Parties’ overlapping DevOps
       tools, namely between on the one hand source code hosting platform for version
       control and collaboration and on the other hand code editors/IDEs.
(17)   Non-horizontal links also exists with respect to the Parties’ non-overlapping
       DevOps tools, namely between:
       -   on the one hand Microsoft's Continuous Integration/Continuous Deployment
           ("CI/CD") tool that facilitates automatic, continuous integration of new source
           code into app builds and automatic deployment, Microsoft's virtual white
           board tool called Agile Planning, Microsoft's packaging tool allowing
           developers to package app source code into an app build and share it with
           other developers for testing and debugging, and Microsoft's testing tool
           enabling testing new features through a series of automated processes before
           they are deployed to users; and
       -   on the other hand, GitHub's source code hosting platform for version control
           and collaboration.
(18)   Finally, a non-horizontal link exists between GitHub's source code hosting
       platform for version control and collaboration and Microsoft's cloud platform
       offering infrastructure-as-a-service ("IaaS") and platform-as-a-service ("PaaS").
                                                 3
 ---pagebreak---         Product market definition
        Past decisions
(19)    While the Commission has not assessed the boundaries of relevant market(s) for
        DevOps tools in past decisions, it has analysed software development tools.4
(20)    The Commission’s previous analysis indicated that the software development
        process consists of five main stages that largely reflect the stages of the DevOps
        lifecycle, with different categories of tools needed at each stage: (1) analysis;
        (2) design; (3) implementation (or coding); (4) testing; and (5) delivery and
        upgrading.
(21)    The Commission, however, eventually "left open the question of whether an
        overall market for software development tools exists, or whether distinct product
        markets have to be defined within the area of software development tools."5
        Notifying Party’s view
(22)    The Notifying Party claims that there is no sound basis for defining distinct
        product markets for different categories of DevOps tools because of the variety of
        products with overlapping functionality and developers' ability to mix-and-match
        solutions from distinct providers based on their individual preferences.
        Commission’s assessment
(23)    When developing and releasing software, developers accomplish various tasks
        and for each of these tasks they use a specific category of DevOps tool.
(24)    From the demand-side perspective, the different categories of tools are not
        substitutes to accomplish these various tasks.
(25)    From the supply-side perspective, even if some providers offer suites of products
        covering different tasks (while others offer point solutions for one specific task),
        this does not mean that supply-side substitution would justify a relevant market
        encompassing all DevOps tools.
(26)    The responses to the market investigation tend to confirm the above. All DevOps
        tools customers that replied to the market investigation indicated that they use a
        wide variety of DevOps tools covering the various tasks that developers need to
        accomplish to develop new software. The overwhelming majority of DevOps
        tools customers also indicated that they either always source DevOps tools
        separately via different licences/subscriptions from potentially different providers
        or at least sometimes source them separately and sometimes bundled together in
        the same licence.6
4  Case No COMP/M.4747 IBM / Telelogic, Commission decision of 5 March 2008, paragraphs 14-19.
5  Ibid, at paragraphs 59 and 122-123; Case M.8223 –Micro Focus/HPE Software Business, Commission
   decision of 8 March 2017, paragraphs 24 and 32.
6  See replies to Questionnaire Q2 to DevOps tools customers, questions 3 and 4.
                                                      4
 ---pagebreak--- (27)     In any event, for the purpose of this decision, product market definition can be
         left open because the Transaction does not raise serious doubts as to its
         compatibility with the internal market regardless of whether there is an overall
         market for different categories of DevOps tools or whether there are separate
         markets for each category of DevOps tools.
         Geographic market definition
         Past decisions
(28)     In past decisions analysing software development tools, the Commission left open
         the question whether the relevant geographic market was EEA-wide or
         worldwide, but the market investigation in those cases indicated a possibly
         worldwide market.7
         Notifying Party’s view
(29)     The Notifying Party claims that DevOps tools (including hosting platforms for
         version control and collaboration) are available worldwide and developers work
         in coding languages that are used globally.
         Commission’s assessment
(30)     For the purpose of this decision, geographic market definition for DevOps tools
         can be left open because the Transaction does not raise serious doubts as to its
         compatibility with the internal market regardless of whether any plausible market
         is EEA-wide or worldwide in scope.
4.2.2. Source code hosting services for version control and collaboration
(31)     A version control system is a piece of software that allows tracking and managing
         changes to source code in the development phase. Many forms of version control
         software exist, including decentralised systems like Git8 and centralised systems
         like Subversion, Perforce or Microsoft's Team Foundation Version Control
         ("TFVC"). Decentralised (or distributed) systems allow each developer on a team
         to make a local copy of the source code being developed, including the entire
         history of changes to that code. This functionality gives each developer the
         flexibility to work simultaneously on his or her respective local copy and then
7   Case No COMP/M.4747 IBM / Telelogic, Commission decision of 5 March 2008, paragraphs 124-126;
    Case M.8223 –Micro Focus/HPE Software Business, Commission decision of 8 March 2017,
    paragraphs 34-36.
8   Git is by far the most-widely used version control system. It is an actively maintained open source
    project originally developed in 2005 by Linus Torvalds, the creator of the Linux operating system
    kernel. As such, it is not controlled by GitHub or by any other source code hosting platforms for
    version control and collaboration. Git provides all the mechanisms for managing changes to source
    code and sharing those changes with others. As a distributed version control system, each Git
    repository can reside on each developer’s computer with the full history of changes. However, Git
    does not come with a graphical user interface, does not provide any hosting service for users’
    repositories, and does not provide any mechanisms for developers to discuss the changes being made
    within a code base. Instead, many source code hosting platforms for version control and collaboration
    provide these additional services and are built on top of the open source Git version control software,
    including GitHub, Microsoft's VSTS and TFS platforms, GitLab, Bitbucket, AWS CodeCommit,
    Google Cloud Source Repositories Gitea, SourceForge, Kallithea, Assembla, and many others. See
    Form CO, https://git-scm.com/, and https://www.atlassian.com/git/tutorials/what-is-git.
                                                         5
 ---pagebreak---      synchronise the various copies with a master version of the source code
     maintained on a central server or public cloud service. In "centralised" version
     control systems, users work off a central copy of the code on a server or in the
     cloud.
(32) The code files and the history of changes are stored in folders called repositories.
(33) These repositories can either be public repositories whose contents are publicly
     accessible or private whose contents are protected from access by unauthorised
     and unauthenticated users. In order to collaborate with other developers on the
     source code, a developer would have to give access to the repositories to other
     developers by creating a copy either in the cloud or on an on-premises server
     connected to the Internet. Instead of storing the central copy of the repositories on
     the cloud or in an on-premises server, developers can choose to host their
     repositories on a source code hosting platform for version control and
     collaboration (such as GitHub), which usually provide a user-friendly interface
     and some additional features. The providers of a source code hosting platform for
     version control and collaboration usually offers these hosting platforms for use
     either online (as a service) and/or on-premises (or hosted on a third-party cloud).
(34) Both GitHub and Microsoft offer source code hosting services for version control
     and collaboration.
(35) GitHub provides the most popular source code hosting platform for version
     control and collaboration both online (GitHub.com) and on-premises (GitHub
     Enterprise). The online platform provides users with access to a cloud service to
     host the repositories where source codes can be stored for collaboration, to an
     open source version control system (Git), to a user-friendly interface, as well as to
     a centralised location for developers to discuss and review with other developers
     the changes that they are making to source code hosted in a Git repository. The
     on-premises platform offers the same service, except for the access to the cloud
     service.
(36) Microsoft offers two source code hosting platforms for version control and
     collaboration, i.e. Visual Studio Team Services ("VSTS") and Team Foundation
     Server ("TFS"), both of which include a Git-based and proprietary centralised
     version control service (TFVC). VSTS is cloud-based and TFS is on-premises.
     Product market definition
     Past decisions
(37) In past decisions, the Commission did not assess the boundaries of the relevant
     market(s) for source code hosting services for version control and collaboration.
     Notifying Party’s view
(38) The Notifying Party claims that there is no separate market for source code
     hosting services for version control and collaboration within the DevOps tools
     market. However, if such a potential market was to be looked at, no further sub-
     segmentation by type of repository (public vs private or online vs on-premises)
     should be considered, because of the existence of supply-side substitution.
                                               6
 ---pagebreak---        Commission’s assessment
(39)   From the demand-side perspective, there appears to be limited (if any)
       substitutability between platforms that are hosted online and those hosted on-
       premises, as well as between public and private repositories. The vast majority of
       customers that replied to the market investigation indicated that they would not
       consider using an on-premises Git-based solution or an online Git-based solution
       with private repositories as a credible alternative for a Git-based online platform
       with public repositories, or vice versa.
(40)   Demand-side substitution also appears to be limited between Git-based platforms
       and other decentralised solutions, and even more between Git-based platforms
       and centralised solutions.9
(41)   From the supply-side perspective, GitHub and its main competitors – GitLab and
       Atlassian – all provide a Git-based source code hosting service for version control
       and collaboration both on-premises and online, with public and private
       repositories.
(42)   For those only providing the service online, respondents to the market
       investigation provided mixed responses as to whether it would be feasible to start
       offering an on-premises solution in a timely manner and without incurring
       significant additional costs.
(43)   By contrast, the majority of respondents to the market investigation indicated that
       providers of source code hosting services on-premises for version control and
       collaboration could start offering an online solution with private repositories in a
       timely manner and without incurring significant additional costs. While extending
       an offering from online with public repositories to online with private repositories
       appears to be easy, the reverse, however, appears to be more difficult as this
       would require having a sufficient number of developers ready to adopt the new
       service to have a critical mass of potential contributors to the customers' source
       code projects.10
(44)   In any event, for the purpose of this decision, product market definition can be
       left open because the Transaction does not raise serious doubts as to its
       compatibility with the internal market regardless of whether there is an overall
       market for source code hosting services for version control and collaboration or
       whether there are separate markets depending on the version control system the
       platform is built on (Git and other decentralised systems or centralised systems)
       and depending on the type of repository (public vs private or hosted vs on-
       premises).
       Geographic market definition
       Past decisions
(45)   In past decisions, the Commission did not assess the boundaries of the relevant
       geographic market(s) for source code hosting services for version control and
       collaboration.
9  See replies to Questionnaire Q2 to DevOps tools customers, questions 5-7.
10 See replies to Questionnaire Q1 to DevOps tools and Iaas/PaaS competitors, questions 4-8.
                                                      7
 ---pagebreak---         Notifying Party’s view
(46)    Irrespective of the definition of the product market, the Notifying Party claims
        that competition in source code hosting services for version control and
        collaboration takes place globally.
        Commission’s assessment
(47)    For the purpose of this decision, geographic market definition for source code
        hosting services for version control and collaboration can be left open because the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market regardless of whether any plausible market is EEA-wide or worldwide in
        scope.
4.2.3. Code editors and IDEs
(48)    Developers can write code using any text editing application such as Microsoft's
        Notepad. Many of them, however, use a code editor, which is a text editor
        designed specifically for editing source code. Developers can also write code
        using applications called IDEs. IDEs typically include a code editor as well as
        additional features such as intelligent code completion, a compiler/interpreter,
        build automation tools, a debugger and testing tools.
(49)    GitHub and Microsoft overlap in code editors and IDEs. GitHub has developed
        the Atom code editor and Atom IDE, which are both open source, offered for free
        and maintained by the open source community. Microsoft offers Visual Studio
        Code and the Visual Studio IDE.
        Product market definition
        Past decisions
(50)    In past decisions, the Commission has not assessed the boundaries of the relevant
        product market(s) for code editors and IDEs.
        Notifying Party’s view
(51)    The Notifying Party claims that there is no separate market for code editors and
        IDEs. However, if such a potential market were to exist, code editors and IDEs
        would likely be part of the same product market as there is significant demand-
        side substitution.
        Commission’s assessment
(52)    Respondents to the market investigation tend to confirm the Notifying Party’s
        claim of demand-side substitution between code editors and IDEs.11
(53)    In any event, for the purpose of this decision, product market definition can be
        left open because the Transaction does not raise serious doubts as to its
        compatibility with the internal market regardless of whether there is an overall
        market for code editors and IDEs or whether there are separate markets for code
        editors and IDEs.
11  See replies to Questionnaire Q2 to DevOps tools customers, questions 8-11.
                                                       8
 ---pagebreak---         Geographic market definition
        Past decisions
(54)    In past decisions, the Commission did not assess the boundaries of the relevant
        geographic market(s) for code editors and IDEs.
        Commission’s assessment
(55)    For the purpose of this decision, geographic market definition for code editors
        and IDEs can be left open because the Transaction does not raise serious doubts
        as to its compatibility with the internal market regardless of whether any plausible
        market is EEA-wide or worldwide in scope.
4.2.4. IaaS/PaaS services
(56)    Cloud computing allows organisations to outsource their computing needs to
        third-party service providers. Customers that decide to deploy workloads in the
        cloud can choose from a wide range of services that enable them to manage
        autonomously to a greater or lesser extent the computing environment. IaaS and
        PaaS are two different forms of cloud computing services offering a "stack" of
        hardware and software components/functionalities on-demand to customers.
(57)    Typically, IaaS comprises the basic capabilities provided by a physical server i.e.
        (i) data processing (or computing); (ii) data storage; and (iii) networking; each
        supported by (iv) "virtualisation" software allowing to simulate individual "virtual
        machines" ("VM") allocated to specific customers often referred to as "tenants",
        and residing on clusters of physical servers hosted in a datacentre. PaaS typically
        comprises the additional software capabilities running on the physical
        infrastructure and required to ultimately execute applications i.e. runtime
        operating systems and middleware. Providers offer a wide and rapidly expanding
        range of services across IaaS and PaaS, pushing into new areas to cater to
        customer demand.
(58)    Microsoft’s Azure cloud platform offers IaaS and PaaS services. GitHub does not
        offer any IaaS or PaaS services.
        Product market definition
        Past decisions
(59)    In past decisions, the Commission considered the following potential distinctions
        within IT outsourcing services: (a) public cloud computing services, (b) IaaS,
        (c) infrastructure outsourcing services, and (d) application outsourcing services.
        However, the Commission ultimately left the product market definition open.12
12  Case No COMP/M.7458 – IBM / INFBusiness of Deutsche Lufthansa; Commission decision of
    15 December 2014, paragraph 20; Case M.8180 –Verizon / Yahoo, Commission decision of
    21 December 2016, paragraph 72.
                                                  9
 ---pagebreak---         Notifying Party’s view
(60)    The Notifying Party submits that IaaS and PaaS form part of an overall market
        due to both demand-side and supply-side substitution. All major public cloud
        service providers offer a full range of IaaS and PaaS services to customers and
        customers choose from a wide range of services and determine the extent to
        which they want to manage the software environment that they want to have
        available.
        Commission’s assessment
(61)    For the purpose of this decision, product market definition can be left open
        because the Transaction does not raise serious doubts as to its compatibility with
        the internal market regardless of whether there is an overall market for IaaS and
        PaaS or whether there are separate markets for IaaS and PaaS.
        Geographic market definition
        Past decisions
(62)    In past decisions, the Commission left open whether the geographic scope of the
        market was EEA wide or worldwide.13
        Notifying Party’s view
(63)    The Notifying Party submits that the market for IaaS/PaaS is worldwide or at
        least EEA-wide in scope.
        Commission’s assessment
(64)    For the purpose of this decision, geographic market definition for IaaS/PaaS
        services can be left open because the Transaction does not raise serious doubts as
        to its compatibility with the internal market regardless of whether any plausible
        market is EEA-wide or worldwide in scope.
5.      COMPETITIVE ASSESSMENT
 5.1.   Analytical framework
(65)    Under Article 2(2) and (3) of the Merger Regulation, the Commission must assess
        whether a proposed concentration would significantly impede effective
        competition in the internal market or in a substantial part of it, in particular
        through the creation or strengthening of a dominant position.
(66)    In this respect, a merger may entail horizontal and/or non-horizontal effects.
        Horizontal effects are those deriving from a concentration where the undertakings
        concerned are actual or potential competitors of each other in one or more of the
        relevant markets concerned. Non-horizontal effects are those deriving from a
13  See Case No COMP/M.7458 – IBM / INF Business of Deutsche Luftansa; Commission decision of
    15 December 2014, paragraphs 30-32; Case M.8180 – Verizon / Yahoo, Commission decision of
    21 December 2016, paragraph 75.
                                                10
 ---pagebreak---          concentration where the undertakings concerned are active in different relevant
         markets.
(67)     As regards non-horizontal mergers, two broad types of such mergers can be
         distinguished: vertical mergers and conglomerate mergers.14 Vertical mergers
         involve companies operating at different levels of the supply chain.15
         Conglomerate mergers are mergers between firms that are in a relationship which
         is neither horizontal (as competitors in the same relevant market) nor vertical (as
         suppliers or customers).16
(68)     A case where a merger entails both horizontal and non-horizontal effects may for
         instance be when the merging firms are not only in a vertical or conglomerate
         relationship, but are also actual or potential competitors of each other in one or
         more of the relevant markets concerned. In such a case, the Commission will
         appraise horizontal, vertical and/or conglomerate effects in accordance with the
         guidance set out in the relevant notices.17
(69)     The Commission appraises horizontal effects in accordance with the guidance set
         out in the relevant notice, that is to say the Horizontal Merger Guidelines.18
         Additionally, the Commission appraises non-horizontal effects in accordance with
         the guidance set out in the relevant notice, that is to say the Non-Horizontal
         Merger Guidelines.
5.1.1. Horizontal effects
(70)     The Horizontal Merger Guidelines distinguish between two main ways in which
         mergers between actual or potential competitors on the same relevant market may
         significantly impede effective competition, namely non-coordinated and
         coordinated effects.
(71)     As regards horizontal non-coordinated effects, under the substantive test set out in
         Article 2(2) and (3) of the Merger Regulation, also mergers that do not lead to the
         creation or the strengthening of the dominant position of a single firm may be
         incompatible with the internal market. Indeed, the Merger Regulation recognises
         that in oligopolistic markets, it is all the more necessary to maintain effective
         competition.19 This is in view of the more significant consequences that mergers
         may have on such markets. For this reason, the Merger Regulation provides that
         "under certain circumstances, concentrations involving the elimination of
         important competitive constraints that the merging parties had exerted upon each
         other, as well as a reduction of competitive pressure on the remaining
         competitors, may, even in the absence of a likelihood of coordination between the
14  Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control
    of concentrations between undertakings ("Non-Horizontal Merger Guidelines"), OJ C 265, 18.10.2008,
    recital 3.
15  Non-Horizontal Merger Guidelines, recital 4.
16  Non-Horizontal Merger Guidelines, recital 5.
17  Non-Horizontal Merger Guidelines, recital 7.
18  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C 31, 05.02.2004.
19  Merger Regulation, recital 25.
                                                     11
 ---pagebreak---         members of the oligopoly, result in a significant impediment to effective
        competition".20
(72)    The Horizontal Merger Guidelines list a number of factors which may influence
        whether or not significant horizontal non-coordinated effects are likely to result
        from a merger, such as the large market shares of the merging firms, the fact that
        the merging firms are close competitors, the limited possibilities for customers to
        switch suppliers, or the fact that the merger would eliminate an important
        competitive force. That list of factors applies equally regardless of whether a
        merger would create or strengthen a dominant position, or would otherwise
        significantly impede effective competition due to non-coordinated effects.
        Furthermore, not all of these factors need to be present to make significant non-
        coordinated effects likely and it is not an exhaustive list.21 Finally, the Horizontal
        Merger Guidelines describe a number of factors, which could counteract the
        harmful effects of a merger on competition, including the likelihood of buyer
        power, entry and efficiencies.
(73)    A merger in a concentrated market may also significantly impede effective
        competition due to horizontal coordinated effects where, through the creation or
        the strengthening of a collective dominant position, it increases the likelihood that
        firms are able to coordinate their behaviour and raise prices. A merger may also
        make coordination easier, more stable or more effective for firms that were
        already coordinating before the merger.22
5.1.2. Vertical effects
(74)    A merger is said to result in foreclosure where actual or potential rivals' access to
        supplies or markets is hampered or eliminated as a result of the merger, thereby
        reducing these companies' ability and/or incentive to compete.23 Such foreclosure
        may discourage entry or expansion of rivals or encourage their exit. Such
        foreclosure is regarded as anti-competitive where the merged entity — and,
        possibly, some of its competitors as well — are as a result able to profitably
        increase the price charged to consumers.24
(75)    Two forms of vertical foreclosure can be distinguished. The first is where the
        merger is likely to raise the costs of downstream rivals by restricting their access
        to an important input (input foreclosure). The second is where the merger is likely
        to result in foreclosure of upstream rivals by restricting their access to a
        sufficiently large customer base (customer foreclosure).
5.1.3. Conglomerate effects
(76)    In the majority of circumstances, conglomerate mergers do not lead to any
        competition problems but in certain specific cases there may be harm to
        competition.25 The main concern in the context of conglomerate effects is that of
20  Merger Regulation, recital 25. Similar wording is also found in paragraph 25 of the Horizontal Merger
    Guidelines.
21  Horizontal Merger Guidelines, paragraph 26.
22  Horizontal Merger Guidelines, paragraph 39.
23  Non-horizontal Merger Guidelines, paragraph 29.
24  Non-horizontal Merger Guidelines, paragraph 29.
25  Non-horizontal Merger Guidelines, paragraph 92.
                                                       12
 ---pagebreak---        foreclosure. 26 Conglomerate mergers may allow the merged entity to combine
       products in related markets and this may confer on the merged entity the ability
       and incentive to leverage a strong market position from one market to another by
       means of tying or bundling, or other exclusionary practices. 27
(77)   In assessing the likelihood of conglomerate effects, the Commission examines,
       first, whether the merged firm would have the ability to foreclose its rivals,
       second, whether it would have the economic incentive to do so and, third, whether
       a foreclosure strategy would have a significant detrimental effect on competition,
       thus causing harm to consumers. In practice, these factors are often examined
       together as they are closely intertwined. 28
 5.2.  Identification of potentially affected markets and other markets where the
       Transaction may raise serious doubts
(78)   Microsoft and GitHub are active in the supply of DevOps tool. Within DevOps
       tools, their activities overlap and give rise to potentially horizontally affected
       markets only in the supply of source code hosting services for version control and
       collaboration and code editors/IDEs. Section 5.3 assesses horizontal non-
       coordinated effects in the potential markets for DevOps tools.
(79)   There are also non-horizontal links between the Parties’ products. In particular,
       Microsoft offers various DevOps tools that are often used in combination with
       source code hosting platforms for version control and collaboration such as the
       one offered by GitHub to develop applications. Similarly, Microsoft is active in
       IaaS/PaaS services. Developers most often deploy the applications that they are
       developing using a source code hosting service for version control and
       collaboration to cloud services (IaaS/PaaS). As GitHub has a share of more than
       30% of the potential market for source code hosting services for version control
       and collaboration, the Transaction may potentially lead to conglomerate effects to
       the detriment of competing DevOps tools and/or competing IaaS/PaaS. These two
       potential non-horizontal non-coordinated effects are analysed in section 5.4.
(80)   Finally, GitHub collects data that may be valuable to develop improved DevOps
       tools and/or IaaS/PaaS. This decision therefore also analyses whether, post-
       Transaction, there would be a risk that the merged entity would refuse or degrade
       access to GitHub’s data to its downstream DevOps tools and/or Iaas/PaaS
       competitors. This last potential non-horizontal non-coordinated effect is also
       analysed in section 5.4.
 5.3.  Horizontal non-coordinated effects
5.3.1. Potential overall market for DevOps tools
(81)   The Commission concludes that the Transaction does not raise serious doubts as
       to its compatibility with the internal market as regards the potential market for
       DevOps tools as a result of horizontal non-coordinated effects. The overlap
       between the Parties would be minimal and many competing players would remain
       post-Transaction.
26  Non-horizontal Merger Guidelines, paragraph 93.
27  Non-horizontal Merger Guidelines, paragraph 93.
28  Non-horizontal Merger Guidelines, paragraph 94.
                                                    13
 ---pagebreak--- (82)    First, the potential overall market for DevOps tools is fragmented. Vendors are
        highly diverse, ranging from small companies selling only one- or two-point
        solutions,29 to very large IT corporations with a broad portfolio.30
(83)    Second, the Parties’ shares in such a potential market are low. According to IDC,
        Microsoft’s worldwide share by revenue in DevOps tools is only [5-10]%, and
        GitHub’s share is only [0-5]%.31 The sources available to the Parties do not
        provide estimates of EEA shares but there is no reason to believe that EEA shares
        would be materially different from worldwide shares. As such, if the relevant
        product market were to encompass all categories of DevOps tools, this would not
        constitute a horizontally affected market.
(84)    Third, competitors on this potential overall market would include IBM ([5-10]%
        worldwide market share), CA Technologies ([5-10]% worldwide market share),
        Micro Focus which recently acquired Hewlett Packard Enterprise's software
        business segment, including its DevOps tools ([5-10]%), New Relic ([5-10]%),
        Google ([0-5]%), Atlassian ([0-5]%), VMware ([0-5]%), AppDynamics ([0-5]%),
        Amazon, GitLab and many others.
5.3.2. Potential market for source code hosting services for version control and
        collaboration
5.3.2.1. Market shares
(85)    The combined market shares of the Parties are high irrespective of the exact
        market definition for source code hosting services for version control and
        collaboration. More specifically, based on a user survey provided by the Parties,
        GitHub would have a worldwide user share of [40-50]% in the potential overall
        market for source code hosting services for version control and collaboration
        (including all type of services irrespective of whether they are based on Git, other
        decentralised version control systems and centralised control systems, and
        whether this service is hosted online or on-premises) while Microsoft would have
        a worldwide user share of [5-10]%. Based on the same survey data, the Parties
        estimate GitHub's and Microsoft's respective worldwide user share would be
        [50-60]% and [0-5]% in a potential market for source code hosting services for
        decentralised version control and collaboration, whether hosted online or on-
        premises. The Parties have no reason to believe that EEA shares would be
        materially different.
(86)    Based on another user survey, the Parties estimate that GitHub's and Microsoft's
        respective worldwide user share would be [30-40]% and [0-5]% in a potential
        market for source code hosting services for decentralised Git-based version
        control and collaboration. In the online segment of such a potential market, the
        estimated respective worldwide user shares would be [40-50]% and [0-5]%, while
        in the on-premises segment, the respective user shares would be estimated at
        [5-10]% and [0-5]%. The Parties have no reason to believe that EEA shares
        would be materially different.
29  Solutions limited to one or two functions.
30  See Form CO, paragraph 229.
31  See IDC, Worldwide DevOps Software Market Shares, 2016: Year of Growth and Innovation,
    July 2017.
                                                 14
 ---pagebreak--- (87)    The Commission has also looked at alternative metrics in order to estimate the
        Parties’ market share, such as the share of monthly active users and monthly gross
        addition of repositories. An assessment of the Parties' market position based on
        these alternative metrics confirms that the Parties' combined market share is
        high.32
5.3.2.2. Notifying Party's view
(88)    Despite the high combined market shares, the Notifying Party considers that the
        overlap between the Parties’ activities does not raise competition concerns.
(89)    First, the Notifying Party submits that, as reflected in its internal documents, the
        rationale of the Transaction is mainly a reputational leverage to improve the
        perception of Microsoft’s products in the eyes of developers. The main driver of
        the Transaction for Microsoft is the fact that GitHub is loved by the open source
        community of "Modern Developers" – i.e. Millennial and late Generation X
        developers that prefer open source architecture and operating systems, such as
        Linux, over Windows. Despite its increasing contribution to the open source
        community over recent years, Microsoft still does not have a good reputation
        among Modern Developers. With the Transaction, Microsoft aims at
        demonstrating its very strong commitment towards the open source community,
        by keeping GitHub’s developer-first ethos and maintaining it as an independent
        open platform for all developers in all industries. Microsoft hopes that this will
        change its reputation and that eventually more developers – many of whom work
        in companies and may play a role in the procurement of DevOps tools and cloud
        services – will increasingly consider Microsoft's cloud offerings (Azure) and its
        various DevOps tools as credible options even for open source software projects.
(90)    Second, Microsoft only has a very limited market presence while there are many
        other providers of source code hosting services for version control and
        collaboration.
(91)    Third: (i) barriers to entry and expansion are low; (ii) switching is technically
        easy because the source code of a project on GitHub as well as the entire history
        of the changes made to the code is also stored on each developer's personal
        computer and can therefore be moved to another hosting service; and (iii) multi-
        homing is common.
(92)    Fourth, Microsoft is not a close competitor of GitHub in source code hosting
        services for version control and collaboration. Microsoft is barely present in
        public repository services (Microsoft’s VSTS and TFS products only offer private
        repositories), which account for more than […]% of GitHub repositories. In
        private repositories whether online or on-premises, GitHub is lagging behind
        Atlassian's Bitbucket, GitLab and others. Moreover, Microsoft and GitHub are
        not close competitors in private repositories. Microsoft’s strength is with
        enterprise developers within companies that built their on-premises IT solutions
        on Microsoft’s Windows platform ("Central IT Developers") that use VSTS as
        part of the Microsoft stack. By contrast, GitHub is used principally by teams
        developing line-of-business applications where VSTS has limited traction.
32  See replies to Questionnaire Q1 to DevOps tools and Iaas/PaaS competitors, question 9.
                                                      15
 ---pagebreak--- 5.3.2.3. Commission's assessment
(93)    The Commission concludes that the Transaction does not raise serious doubts as
        to its compatibility with the internal market as regards the potential market for
        source code hosting services for version control and collaboration as a result of
        horizontal non-coordinated effects.
(94)    First, Microsoft's online hosting platform VSTS is not a credible alternative to
        GitHub's online source code hosting platform for version control and
        collaboration with public repositories. Almost all customers that responded to the
        market investigation and that use public repositories on GitHub.com, consider
        GitLab and Bitbucket as the most likely alternatives they would consider
        switching to if GitHub was not available and do not consider Microsoft at all. 33
(95)    Second, as regards private repositories hosted online, GitHub's users do not seem
        to consider Microsoft's VSTS a credible alternative. The vast majority of users of
        private repositories on GitHub.com that responded to the market investigation do
        not even consider VSTS a possible alternative to GitHub.com. The only customer
        that considered VSTS a potential alternative, considered it as third potential
        option behind Bitbucket and GitLab. GitLab and Bitbucket are considered the
        most likely alternatives to GitHub.com for private repositories by the vast
        majority of respondents.34
(96)    Third, the same is true for users of GitHub Enterprise (on premises solution).
        Again GitLab and Bitbucket are considered the most likely alternatives, whereas
        Microsoft's on premises solution does not appear as a credible alternative. 35
(97)    Fourth, Microsoft and GitHub are not close competitors. They actually address
        different categories of customers. Customers of VSTS and TFS are typically older
        Central IT Developers using a broader set of Microsoft products and services such
        as Microsoft’s Visual Studio and .NET platforms, while GitHub’s users are
        primarily young Modern Developers using open source tools and platforms.36
(98)    Fifth, developers have ample choice to develop code collaboratively on a Git-
        based system similar to GitHub. There is Bitbucket, GitLab, but also Gitea, AWS
        CodeCommit, Google Cloud Source Repositories, Kallithea, SourceForge, etc.
        The vast majority of GitHub's and Microsoft's DevOps tools competitors that
        responded to the market investigation acknowledged that, post-Transaction, there
        will remain sufficient alternative providers of source code hosting services for
        version control and collaboration for developers.37
(99)    Sixth, the majority of GitHub's customers that responded to the market
        investigation confirm that it is easy for developers to switch hosting platform.38 In
        particular, they confirm that the source code of a project on GitHub as well as the
        entire history of the changes made to the code are also stored on each developer's
33  See replies to Questionnaire Q2 to DevOps tools customers, question 15.
34  See replies to Questionnaire Q2 to DevOps tools customers, question 14.
35  See replies to Questionnaire Q2 to DevOps tools customers, question 16.
36  Form CO.
37  See replies to Questionnaire Q1 to DevOps tools and IaaS/PaaS competitors, question 18.
38  See replies to Questionnaire Q2 to DevOps tools customers, question 24.
                                                      16
 ---pagebreak---         personal computer and can therefore be moved to another hosting service fairly
        easily.
(100) The ease of switching is facilitated by multi-homing of users between GitHub and
        competing Git-based version control services. According to the data provided by
        the Notifying Party, in the past 12 months […]% of GitHub users also visited
        GitLab and/or Bitbucket.39 This indicates that most users of GitHub are familiar
        with the user interface and other features of competing service providers which
        reduces any learning cots involved in switching.
(101) Moreover, switching does not appear to raise complex coordination issues.
        According to the information provided by the Notifying Party, […]% of public
        repositories hosted on GitHub have just a single contributor and a further […]%
        of public repositories have between one and five contributors. Moreover, most
        public repositories on GitHub do not attract contributions from anyone else than
        the developer that created the repository.
(102) Possibility of switching also mitigates any potential network effects from which
        GitHub may benefit. Such network effects may arise notably in relation to public
        repositories where the value of a hosting service like GitHub for its users may
        increase as its total number of developers (and hosted projects) grows.
        Nevertheless, the ease and propensity of users to switch, as described in
        paragraphs (99)-(101), are likely to weaken any such network effects. Indeed,
        when Microsoft first considered acquiring GitHub in […], it identified the risk of
        mass switching of users: "[…]."40
(103) Seventh, while Microsoft acknowledges that it could technically block the
        portability of issues41 and pull requests42 that can currently be ported to another
        version control service using GitHub’s Application Programming Interface
        (APIs)43 by shutting down these APIs, it appears unlikely that it would have the
        incentive to do so.
(104) In the first place, blocking the portability of such data would be ineffective at
        preventing developers from switching to a rival version control service, because
        only a very small fraction of developers use these features on GitHub ([…]% for
39 Form CO, paragraph 267.
40 […].
41 "Issues" is a bug tracker offered by GitHub that enables users to post "issues" relating to their coding
   work on a project and ask others to comment, for instance, on how to solve a coding problem or install
   and use a given application. See https://help.github.com/articles/about-issues/.
42 A pull request is a feature offered by GitHub that lets developers tell others about changes they have
   pushed to a GitHub repository. Once a pull request is sent, other developers can review the set of
   changes, discuss potential modifications, and push follow-up changes if necessary. See
   https://help.github.com/articles/about-pull-requests/.
43 In computer programming, an application programming interface is a set of subroutine definitions,
   communication protocols, and tools for building software. In general terms, it is a set of clearly
   defined       methods       of      communication       among        various      components.        See
   https://en.wikipedia.org/wiki/Application programming interface.
                                                        17
 ---pagebreak---          pull requests, […]% for issues and […]% for wikis44), and some of this data could
         still be accessed on GitHub.45
(105) In the second place, any attempt by Microsoft to block the portability of such data
         would be counterproductive because it would necessarily also degrade the
         interoperability of third party tools that rely on such data with GitHub services, as
         GitHub cannot selectively degrade access to its APIs.
(106) In the third place, degrading the portability of such data would most likely
         alienate the open source community and turn Modern Developers away from
         Microsoft’s products and services, undermining the rationale for the Transaction
         as described in paragraph 88.
5.3.3. Potential market for code editors and IDEs
(107) The Commission concludes that the Transaction does not raise serious doubts as
         to its compatibility with the internal market as regards the potential market for
         code editors and IDEs as a result of horizontal non-coordinated effects.
(108) First, based on survey data submitted by the Notifying Party, their combined
         worldwide user share would be: (i) approximately [20-30]% ([20-30]% Microsoft,
         [5-10]% GitHub) in a potential combined market including code editors and
         IDEs; (ii) [30-40]% in a potential market including only code editors ([20-30]%
         Microsoft, [10-20]% GitHub); and (iii) [20-30]% in a potential market including
         only IDEs ([20-30]% Microsoft, [0-5]% GitHub).46 However, post-Transaction
         the Parties will continue to compete against a large number of code editors and
         IDEs in a differentiated product space in which developers choose the tools that
         they prefer amongst the many options available to them.
(109) Second, GitHub's Atom IDE and code editor are open source software developed
         by a community on GitHub. Even if post-Transaction, Microsoft decided to cease
         supporting Atom, anyone could ‘fork’47 the code and launch a copy of Atom.
 5.4.    Non-horizontal non-coordinated effects
5.4.1. Conglomerate non-coordinated effects to the detriment of competing DevOps
         tools
5.4.1.1. Potential concern
(110) The Commission has assessed a potential concern raised by respondents to the
         market investigation whereby Microsoft could leverage the popularity of GitHub's
         source code hosting services for version control and collaboration to boost its own
         sales of DevOps tools (in particular Visual Studio IDE, Visual Studio Code,
         and/or any of VSTS's tools). Microsoft could undertake such leveraging by:
44  Wiki is a place in the user’s repository where they can share content about their project (e.g., what it is,
    how it has been designed, how to use it, core principles, etc.).
45  Based on information submitted by the Notifying Party, the portability of wiki data cannot be
    restricted since wikis reside in repositories and thus can be exported using the Git protocol.
46  The Parties have no reason to believe that EEA shares would be materially different.
47  In software engineering, a project fork happens when developers take a copy of source code from one
    software package and start independent development on it. As Atom and Atom IDE are open source
    they can be forked. See https://en.wikipedia.org/wiki/Fork (software development).
                                                          18
 ---pagebreak---         (i) further integrating Microsoft's DevOps' tools with GitHub; (ii) limiting
        GitHub's interoperability with competing DevOps tools; or (iii) limiting the
        integration of competing DevOps tools with GitHub.
5.4.1.2. Notifying Party's view
(111) The Notifying Party claims that this concern is not justified because it would have
        neither the ability nor incentive to foreclose providers of competing DevOps
        tools.
(112) First, GitHub users would rather move their projects to competing Git-based
        source code hosting services for version control and collaboration, such as GitLab
        or Bitbucket, rather than be bound to use any of Microsoft's DevOps tools. There
        would be no barrier to switching because the source code of a project on GitHub
        as well as the entire history of the changes made to the code is also stored on each
        developer's personal computer and can therefore be moved to another hosting
        service. Moreover multi-homing is common.
(113) Second, Microsoft would not only lose developers and therefore revenues from
        GitHub's source code hosting service for version control and collaboration
        activity, it would also alienate the open source community of developers and turn
        them away from all of Microsoft's products and services, thereby undermining the
        very rationale of this Transaction.
5.4.1.3. Commission's assessment
(114) The Commission concludes that Microsoft will have neither the ability nor the
        incentive to foreclose providers of competing DevOps tools by further integrating
        Microsoft's DevOps tools with GitHub.
(115) First, this would undermine the Transaction rationale (as described in
        paragraph 88) and limit the integration of competing DevOps tools with GitHub.
        This has been confirmed by the analysis of Microsoft’s internal documents where
        there was no mention of such a strategy; on the contrary, Microsoft’s intention is
        to cater for the needs of developers, first among all openness and freedom of
        choice.
(116) Second, even if Microsoft were to start engaging in such conduct, it is unlikely to
        be successful.
(117) In the first place, GitHub users that responded to the market investigation
        indicated that they would not let themselves pressured to adopt Microsoft's
        DevOps tools that they are not currently using. More specifically, all GitHub's
        customers that expressed an opinion on the matter replied that if, post-
        Transaction, Microsoft would further integrate Microsoft's DevOps with GitHub
        while limiting the possibilities for competing DevOps tool to offer equally
        integrated solutions with GitHub, their developers would either switch to other
        source code hosting services for version control and collaboration (such as GitLab
        and Bitbucket) or to a lesser extent would continue to use GitHub but not adopt
                                                 19
 ---pagebreak---         Microsoft's offering. Instead, they would continue using their preferred product
        even if less well integrated with GitHub.48
(118) In the second place, the vast majority of customers that responded to the market
        investigation confirmed that their developers would move away from GitHub to
        one of its competitors if they were unhappy with Microsoft's way of dealing with
        GitHub.49
(119) In the third place, as explained in paragraphs 94-95, several alternative providers
        of source code hosting platforms for version control and collaboration exist to
        which customers could turn and with which DevOps tool providers could
        integrate and there are no significant barriers for customers to switch to these
        alternatives.
5.4.2. Conglomerate non-coordinated effects to the detriment of competing IaaS/PaaS
5.4.2.1. Potential concern
(120) The Commission has assessed a potential concern raised by respondents to the
        market investigation whereby Microsoft could further integrate Microsoft's cloud
        platform Azure with GitHub and degrade or limit interoperability of competing
        IaaS/PaaS with GitHub to prevent GitHub users from deploying their application
        to their preferred IaaS/PaaS, and thereby foreclose competition in IaaS/PaaS.50
5.4.2.2. Notifying Party's view
(121) The Notifying Party claims that this concern is not justified because it would have
        neither the ability nor the incentive to foreclose competition in IaaS/PaaS.
(122) First, Microsoft would not have the ability to prevent a developer from deploying
        code to the destination of its choice. This is because deployment from GitHub
        does not involve any GitHub API. If a developer is deploying from GitHub using
        a CI/CD tool, that tool reaches into the user’s repository to pull source code via
        the Git protocol – not via a GitHub API.
(123) Second, customers would simply leave GitHub if they were not able to deploy to
        their IaaS/PaaS service of choice. The choice of a IaaS/PaaS provider is not at all
        driven by how well it integrates with source code hosting platform for version
        control and collaboration, rather a source code hosting platform for version
48  This is true irrespective of the category of DevOps tools Microsoft would attempt to integrate further
    with GitHub and irrespective of whether the developers use GitHub's on premises platform or online
    with public or private repositories. See replies to Questionnaire Q2 to DevOps tools customers,
    questions 26-31.
49  See replies to Questionnaire Q2 to DevOps tools customers, question 32.
50  Another concern raised in the market investigation is that Microsoft may engage in mixed bundling of
    GitHub's hosting platform with Microsoft Azure's IaaS/PaaS offering, which would lead to the
    foreclosure of competing hosting platforms for version control and collaboration. Given the limited
    market share of Microsoft in IaaS/ PaaS ([5-10]-[10-15]% depending on the exact market definition),
    the Commission concludes that the merged entity would not have sufficient market power in
    IaaS/PaaS to foreclose its competitors in the potential market for source code hosting services for
    version control and collaboration. Moreover, and in any event, providers of hosting platforms for
    version control could team up with a cloud platform like Amazon (which has a much stronger position
    than Microsoft in cloud services) or Google to combine their offers and deploy a counterstrategy.
                                                       20
 ---pagebreak---         control and collaboration succeeds or fails based on how well it integrates with
        IaaS/PaaS services.
(124) Third, even if Microsoft were to prevent developers from deploying to competing
        IaaS/PaaS, this would not significantly foreclose competition in IaaS/PaaS,
        because GitHub’s footprint on overall IaaS/PaaS workloads is too limited to have
        any competitive significance.
5.4.2.3. Commission's assessment
(125) The Commission concludes that Microsoft will have neither the ability nor
        incentive to foreclose competition in IaaS/PaaS by further integrating Microsoft's
        Azure with GitHub and by degrading or limiting interoperability of competing
        IaaS/PaaS with GitHub.
(126) First, this would undermine the Transaction rationale. This has been confirmed by
        the analysis of Microsoft’s internal documents where there was no mention of any
        such strategy; on the contrary, Microsoft’s intention is to cater for the needs of
        developers, first among all openness and freedom of choice.
(127) Second, this view is shared by competing providers of IaaS/PaaS. For example,
        according to Google, "today Microsoft is fully committed to open source and
        would not undermine the open nature of GitHub".51
(128) Third, even if Microsoft were to start engaging in such conduct, it is unlikely to
        be successful.
(129) In the first place, GitHub users that responded to the market investigation
        indicated that they would not let themselves pressured to deploy on Azure, rather
        than on their preferred IaaS/PaaS. More specifically, all GitHub's customers who
        expressed an opinion on the matter replied that if, post-Transaction, Microsoft
        would further integrate its Azure IaaS/PaaS with GitHub while limiting the
        possibilities for competing IaaS/PaaS providers to offer equally integrated
        solutions with GitHub, their developers would switch to other source code hosting
        services for version control and collaboration (such as GitLab and BitBucket).52
(130) In the second place, as explained in paragraphs 94-95, several alternative
        providers of source code hosting platforms for version control and collaboration
        exist to which customers could turn to and with which IaaS/PaaS providers could
        integrate and there are no significant barriers for customers to switch to these
        alternatives.
5.4.3. Vertical non-coordinated effects regarding access to data
5.4.3.1. Potential concern
(131) GitHub collects three categories of data: user-generated content, users' personal
        information, and metadata.
51  See minutes of the conference call held with Google on 5 September 2018.
52  See replies to Questionnaire Q2 to DevOps tools customers, questions 26-31.
                                                       21
 ---pagebreak--- (132) The user-generated content consists of source code, revision history, identity of
         author, commit messages,53 as well as the data created using additional tools and
         features offered by GitHub (GitHub issues data, GitHub Projects54 data, GitHub
         pull request data, Wiki pages data, Integrators data55). This data is stored in public
         and in private repositories. The users' personal information consists in data
         collected by GitHub about its users to create accounts and provide the service,
         such as user name, password, and email address. Metadata consists in data
         generated from the normal commercial operations of GitHub.com, such as
         measuring and understanding aggregate usage of GitHub.com features,
         understanding the types of devices accessing GitHub.com (for example, Chrome
         browser, iPhone and Firefox), and billing information.
(133) The Commission has assessed a potential concern raised by respondents to the
         market investigation whereby Microsoft could refuse or degrade access to
         GitHub’s data to its downstream DevOps tools and/or IaaS/PaaS competitors.
         Should this data be an important input for the development of improved products,
         these competitors may be unable to offer products on par with those of Microsoft,
         and the intensity of competitive constraints in any of the potential markets for
         DevOps tools and IaaS/PaaS, as well as the level of choice, may be reduced.
5.4.3.2. Notifying Party's view
(134) The Notifying Party claims that this concern is not justified because it would have
         neither the ability nor incentive to refuse or degrade access to GitHub’s data to its
         downstream DevOps tools and/or IaaS/PaaS competitors.
(135) First, Microsoft will not have the ability to degrade access to such data. Virtually
         all user-generated content and related data in public repositories (source code,
         revision history, identity of author, commit messages) is accessible to third parties
         not only via the GitHub API/webhooks56 but also through the open source Git
         protocol, which GitHub does not control.
(136) Second, as regards the data created using additional tools and features offered by
         GitHub (GitHub Issues data, GitHub Projects data, GitHub pull request data, Wiki
         pages data, Integrators data), although it is accessible to third parties only via the
         GitHub API/webhooks, this data has also been archived by third parties and is
         publicly accessible through alternative suppliers.
(137) Third, user-generated data in private repositories is already unavailable to third
         parties today. Moreover, it is confidential to the user.
53  The changes or edits to a code are known as "commits". Each commit has an associated commit
    message, which is a description explaining why a change was made. See Form CO, paragraph 158.
54  GitHub Projects is a project management and issue tracking tool which allows GitHub's users to create
    project boards to organize and prioritize their work.
55  Integrators data includes data generated on behalf of users by third parties integrating with GitHub,
    such as when a third-party tool creates a “check” in GitHub to reflect tests passed or running.
    According to the Notifying Party, GitHub does not control what data an integrator chooses to provide
    to the customer, so the scope of the integrator data can vary.
56  Webhooks provide a way for notifications to be delivered to an external web server whenever certain
    actions occur on a repository or organization. Using the GitHub API, developers can make these,
    trigger CI builds, update a backup mirror, or even deploy to your production server. See
    https://help.github.com/articles/about-webhooks/.
                                                          22
 ---pagebreak--- (138) Fourth, user personal information and metadata is not competitively significant
        and its use by Microsoft would not offer a competitive edge over its competitors.
5.4.3.3. Commission's assessment
(139) The Commission concludes that Microsoft will have neither the ability nor
        incentive to refuse or degrade access to GitHub’s data to its downstream DevOps
        tools and/or IaaS/PaaS competitors, in a way that would foreclose competition in
        those potential markets. This has been confirmed by the analysis of Microsoft’s
        internal documents where there was no mention of any such strategy; on the
        contrary, Microsoft’s intention is to cater for the needs of developers, first among
        all openness and freedom of choice.
(140) The Commission has reached this conclusion for: (1) data currently accessible to
        third parties, i.e. user-generated data in public repositories; and (2) data currently
        not accessible to third parties (i.e. business operations information, personal
        information and data in private repositories).
        Data currently accessible to third parties
(141) First, Microsoft will not have the ability to restrict access to most of the data that
        is currently accessible to third parties (source code, revision history, identity of
        author, commit messages in relation to public repositories). This data is accessible
        not only via the GitHub API/webhooks but also through the Git protocol, which
        GitHub does not control. GitHub wiki data is also accessible through the Git
        protocol that Microsoft cannot block without fundamentally altering the
        architecture of Git.57
(142) Second, in addition to such data, GitHub collects issues data, projects data, pull
        request data and integrators data. Although Microsoft could block access to such
        data by shutting down the GitHub APIs, it will not have the incentive to do so.
(143) In the first place, shutting down the GitHub APIs would generally reduce the
        attractiveness of GitHub as it would necessarily degrade the interoperability of all
        third party tools that rely on such data. Indeed, Microsoft would be unable to shut
        down the GitHub APIs for certain use cases or for specific competitors.
        Consequently, Microsoft would have to break existing project workflows and
        degrade the overall user experience on GitHub, with the risk of losing many
        customers to competing version control systems.58
(144) In the second place, if Microsoft were to engage in such a strategy, it would
        undermine the trust that GitHub has gained with Modern Developers by keeping
        its platform open.59
(145) Fourth, even if Microsoft were to block access to issues data, projects data, pull
        request data and integrators data, this is unlikely to lead to anticompetitive effects.
57  See Microsoft's response to the Commission's request for information of 1 October 2018 (RFI 5),
    paragraph 28.
58  See Microsoft's response to the Commission's request for information of 1 October 2018 (RFI 5),
    paragraphs 14 and 31.
59  See Microsoft's response to the Commission's request for information of 1 October 2018 (RFI 5),
    paragraphs 31-32.
                                                    23
 ---pagebreak--- (146) In the first place, these categories of user-generated data do not seem to be
         competitively important inputs that Microsoft could reserve for itself. Microsoft
         currently does not have any concrete plans to use them, and does not see the value
         that it could bring.60
(147) In the second place, none of the respondents to the market investigation indicated
         otherwise.61 Rather the majority of competitors that responded to the market
         investigation did not consider any of the GitHub data as essential to their
         activity.62
(148) In the third place, competitors have access to equivalent user-generated data that
         Microsoft does not and cannot control. Currently, GH Torrent, Google Big Query
         and GH Archive provide access to data in GitHub public repositories and
         Microsoft cannot block access to these existing data repositories.63
(149) In the fourth place, there are alternative data sources that provide insights into
         developer activity, including public repositories hosted on GitLab, Bitbucket and
         other sites providing version control services. The same is true of Stack
         Overflow64 and similar Q&A sites. These sites – like issues and pull requests –
         can be mined to obtain insights into the problems and bugs that developers are
         facing and how they can be fixed. Stack Overflow data can be analysed using
         Google BigQuery.
(150) In the fifth place, a majority of competitors that responded to the market
         investigation indicated that, post-Transaction, there will remain sufficient
         alternative providers of data equivalent to that currently accessible on GitHub for
         their respective activities.65
         Data currently not accessible to third parties
(151) First, as the rest of the data generated by GitHub (business operations
         information, personal information and data in private repositories) is currently not
         accessible to third parties, and as absent the Transaction there is no evidence
         demonstrating the likelihood that GitHub would start offering access to this data,
         the Transaction will not lead to any restriction of access to such data.
(152) Second, in any event, none of this data is likely to be competitively significant.
         Based on the information available to the Commission, user-generated data in
         private repositories is not a competitively unique and critical input, as it is similar
         in nature to the data contained in GitHub public repositories or in repositories of
         competing source code hosting platforms for version control and collaboration
         such as GitLab and Bitbucket.66
60 See Microsoft's response to the Commission's request for information of 1 October 2018 (RFI 5),
   paragraph 30.
61 Questionnaire Q1 to DevOps tools and IaaS/PaaS competitors, questions 31-32 and 39.
62 Questionnaire Q1 to DevOps tools and IaaS/PaaS competitors, question 31.
63 See Microsoft's response to the Commission's request for information of 1 October 2018 (RFI 5),
   paragraph 33.
64 It is a site dedicated to software developers.
65 Questionnaire Q1 to DevOps tools and IaaS/PaaS competitors, question 32.
66 See Form CO, paragraph 326.
                                                   24
 ---pagebreak--- (153) Third, Microsoft's post-merger access to the user-generated data in private
       repositories and personal information will be subject to important constraints, as
       per GitHub's Terms of Services.67 Microsoft could not access such data to its
       benefit, while denying access to competitors, without breaching GitHub's Terms
       of Services with its customers.
6.     CONCLUSION
(154) For the above reasons, the European Commission has decided not to oppose the
       notified operation and to declare it compatible with the internal market and with
       the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of
       the Merger Regulation and Article 57 of the EEA Agreement.
                                                             For the Commission
                                                             (Signed)
                                                             Margrethe VESTAGER
                                                             Member of the Commission
67 According to the Notifying Party, GitHub protects private repositories from unauthorised access.
   GitHub employees may not access the contents of private repositories except for support, with user
   knowledge and consent, to maintain the integrity of the service, or for security reasons. Users of
   private repositories may by opting in enable GitHub to perform a "read-only" analysis of that specific
   private repository. That means the data is scanned by machine and never read by GitHub staff. See
   About GitHub’s Use of Your Data (available at https://help.github.com/articles/about-github-s-use-of-
   your-data/).
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