BetaNews has learned that amidst MySpace’s move to join Google’s OpenSocial community, Microsoft is now in talks with Facebook to integrate Windows Live ID into the quickly growing social network.
Reliable sources tell BetaNews that the two companies have begun talks on integrating login systems following an advertising agreement that gives Microsoft a 1.6 percent stake in Facebook in exchange for $240 million.
Microsoft previously pushed its Passport authentication system — now renamed to Windows Live ID — on third-party sites such as eBay. But that effort was eventually abandoned and Microsoft has focused on making Live ID work across the Redmond company’s own services, including its Xbox Live gaming platform.
With Google’s move to become the primary platform for social networking-based applications, however, Microsoft appears to have changed course. Late Thursday came news that MySpace would join Google’s newly announced OpenSocial API platform, handing a huge win to the search giant. Bebo and others like Friendster are also joining Google.
Facebook was the first site to truly open up for third party developers to create mini-applications that can run on users’ profiles. Companies are eager to tap into the massive visitor bases on social networking sites, which gives them instant exposure and an audience that could potentially bring in revenues. The largest Facebook applications count millions of users, which would not have been possible without the viral nature of the site.
While many of Facebook’s rivals announced plans to develop their own open platforms, almost everyone has now opted to join Google on OpenSocial. Google said it has been working with MySpace for a year on building the platform, which began shortly after the two companies inked a $900 million advertising agreement.
With the addition of MySpace and Bebo, Google now counts far more users than Facebook, so developers may opt to create applications for OpenSocial rather than the individual site. Facebook was apparently not told of Google’s plans, but the site could still add compatibility for OpenSocial’s APIs. However, that would mean Facebook loses control of the platform to Google, which may be difficult for the company to accept.
At the end of the day, however, it’s still not clear how big of a market there is for applications running on social networking sites. While a handful such as Slide and iLike have garnered millions of users, most developers count mere thousands. In addition, no application developer has found a good way to monetize those users – something that Google will surely be focused on through OpenSocial.
Industry pundit Michael Arrington expects Facebook to join Google, because if it doesn’t the site will look like the closed outsider.
“For their part, Google will certainly want Facebook’s participation. But they had to get everyone else on board first, before Facebook would even consider it,” Arrington wrote on his TechCrunch blog. “An open platform means no social network has any advantage over any other when it comes to third party applications. The playing field has been evened, and no one wins. Except Google. They always win.”
But Microsoft, with its newfound ties to Facebook, may not want to give in so easily – especially if it is successful in adding Windows Live ID to the site. The two companies could attempt to leverage Microsoft’s huge developer community and create their own standard that also spans Windows Live Spaces, setting up a showdown with Google and MySpace.