Developments today prompted me to pull this post I’ve been working on ahead of Part 2 of the "Microhoo Post Mortem Post". Here’s why:

Today, some not so minor controversy erupted in the blogosphere in reaction to the news that Facebook had just shut down Google’s FriendConnect on its platform. There were a lot of details being discussed re: data privacy vs. data portability between still largely "walled garden" social networks, all of which are quite relevant to a larger discussion on the future of the Web.

And Robert Scoble of Fast Company and Mike Arrington of TechCrunch got into a bit of shouting match on Twitter, a "GillmorGang" teleconference call, and their respective blogs.

I am not going to get into the finer points of the data issues here (but you should by all means read the above posts and commentary if you are into this sort of thing). But once again it appears that some larger strategic issues are being lost in the shuffle.

Check out what I wrote in a comment on a Silicon Valley Insider Micro-hoo post about a week or so ago:

While nothing is certain, this [Microsoft-Facebook deal idea would be] already a much better idea than the Yahoo deal. Given what’s going on right now with MySpace adopting Google’s OpenSocial, and making deals with Twitter, Yahoo, et al. to use MySpace data/resources in their systems, MSFT could actually try to preempt Google from running away with social networking:

Buy Facebook and VERY QUICKLY throw weight behind Facebook’s API as a competing standard to OpenSocial in opening up the "walled garden" of Facebook in strategic ways. Facebook apps are starting to lose developers from what I hear, many of which may be moving to OpenSocial API app development. Such a move could stop the slow-down/bleeding, if developers had a sense that big MSFT dollars were now gearing to put the pedal to the metal…

The longer term question is not IF social data will become complete openly exchangeable on the Web, but when. There is no need to have the same things stored/replicated in 1/2 dozen or more places/systems.

Alternatively, MSFT/Facebook could just adopt OpenSocial, and then look to gain more influence on the standard, trying to out-flank/out-innovate MySpace/Google. No good if MSFT let’s Google run away with it in yet another area.

(I took the liberty of adding a few links and minor grammar improvements into the quote.)

And this, in a nutshell, has been exactly the underlying dynamic of what has been playing itself out since yesterday. Leave out MSFT for a moment (though they are certainly lurking in the background), and the Facebook vs. Google/OpenSocial/MySpace battle lines were clearly being drawn…

This shut-down of Google’s FriendConnect application on Facebook, for which both sides have already offered various rationales, justifications, and rebuttals as to the true facts, is just the first salvo in what is sure to be a prolonged war, with Microsoft’s next actions being the potential wild card.

Not that their entry into the fray would guarantee anything one way or the other, but $45 Billion in mostly loose cash can have interesting effects to say the least, especially if Microsoft could get over themselves on this one and make a true attempt at unbridled innovation for once.

The social network issue in itself is very telling by the way how far Yahoo has been falling behind, and how Micro-hoo would have been far from a sure bet to getting any traction in this area: Go check out Yahoo’s two in-house social developments, Yahoo 360, which is hanging in limbo (view their more or less orphaned developer blog here), and Mash (their dev blog also apparently abandoned).

And as I mentioned before, I have it from inside sources that Yahoo also killed another very innovative social-cum-wiki type project (presumably different from Mash) in its early alpha mock-up stages just before the MSFT bid occurred, apparently that was too forward-thinking as well.

Facebook has certainly built up a lot of sophistication in their platform, there is a lot more there technically for those with the eyes to see it. I am not arguing that anyone should therefore like/love Facebook, but they deserve at least a little credit for things they have innovated.

Also, in regards to the Micro-hoo visions of better competing with Goolge in the ad serving realm, Facebook social ads do have quite a bit of potential as there are so many more demographic targeting angles available. In throwing up ads with social properties or (YouTube) videos, context is everything.

Get the context just right, and someone might actually click on an ad. And the key to the context outside of search (which in itself gives you an idea of what the querent wants), is to have the demographic and other semantic context. And that’s where social networks in principle have the chance to shine.

If Microsoft wants to be in ad serves at all, which they clearly still do, it would be better to figure out how to do it right on Facebook instead of a smaller stage. So, all in all, a Microsoft-Facebook play could be a decent idea, though it would all be in the execution… and MSFT not trying to rename things "Windows Live Facebook".  :)