By Yi-Wyn Yen

Yahoo has joined Google and MySpace to form the three musketeers of social media. The companies announced Tuesday they are starting the OpenSocial Foundation to create universally-accepted standards for social networking sites and applications.

Yahoo’s endorsement of Google’s OpenSocial initiative comes two weeks after MySpace (NWS) opened its doors to developers using the OpenSocial standard. MySpace was the first social networking site to adopt OpenSocial.

Yahoo (YHOO) did not disclose which of its web properties will use OpenSocial. “We’re supporting OpenSocial because it’s rapidly growing and maturing,” said Wade Chambers, Yahoo’s vice president of platforms.

The OpenSocial Foundation plans to provide a formal intellectual property and governance framework for developers. Google OpenSocial director Joe Kraus argues that as the web becomes more social and social networking sites open up their platforms, developers will benefit from using a set of common standards. Kraus says the nonprofit will set up shop in 90 days.

“Open source is important,” Kraus told Fortune last week. “It gives [sites] and developers the confidence that they can use OpenSocial in perpetuity without concern of something bad happening. It’s always available to them and it’s not going to be obsolete.”

Google (GOOG) announced its OpenSocial initiative last fall one week after Microsoft (MSFT) agreed to pay Facebook $240 million for a minority stake. Facebook became the first social network to open its platform to developers last May. Facebook, which uses its own open-source platform, says it does not have any immediate plans to join the OpenSocial Foundation.

By Jessi Hempel

At long last, the MySpace Developer Platform is open for business. News Corp’s social networking behemoth is launching a dedicated site for developers Tuesday and it will go live to all audiences in a month.

Says MySpace COO Amit Kapur: “We want to make sure that we build a rich platform for monetization for the developers.” That’s jargon for the promise that MySpace will make widget-makers money.

That’s a significant turnaround for the site, which just one year ago considered third-party developers to be parasites, sucking away traffic and ad dollars. While Facebook embraced widget makers, MySpace (NWS) originally tried to control them and was accused of booting them from the site. That changed, though, as Facebook gained a major boost in traffic and valuation from the applications that outside developers launched. Speaking at the Web 2.0 conference last fall, MySpace co-founder Chris DeWolfe promised to open the site up.

The MySpace Developer Platform will be a social networking hub for creators of applications that run on the site. The site will host a blog, and it will give developers the tools to build their applications in a live environment. It will also offer forums, sample code, and an opportunity for developers to test their applications on pools of five member profiles in advance of release. The platform will support OpenSocial, the Google initiative to establish a common set of tools for developing widgets so they work across platforms, right from the start.

MySpace has also promised to help developers profit from their widgets. The site plans to offer developers access to much of the information the company has gathered in testing hyper-targeting strategies with advertisers and its experiment in self-serve advertising. “It’s a long-term play for us,” says Kapur, a MySpace veteran who assumed the COO post last week. “If we can tie those technologies into the developer platform environment, we are going to help them make money and we can build a new business for ourselves.”

“It’s an important evolutionary step for Myspace,” says analyst Rich Greenfield of Pali Research. “They need to harvest the power of developers across the Internet. It will be interesting to see how attractive this platform is compared to the Facebook platform.” With an eight-month lead, Facebook has a rich developers’ community. But with 69 million users logging onto their profiles in December, MySpace offers a lucrative and attractive environment for widget makers.

The challenge for MySpace will likely be attracting developers by giving them access to marketing data without compromising member’s experience. Before MySpace was a place for developers, it was, after all, “a place for friends.”

On Wednesday, Fortune’s David Kirkpatrick weighed in on the latest controversy surrounding Facebook and its new advertising system. While some critics in the media say the social networking site is doomed based on its own mistakes, Kirkpatrick argues that the site will not only survive concerns about violations of members’ privacy, but will continue to thrive. What do you think? Are you a Facebook fan or foe?

By Jessi Hempel

A hush fell over a packed sixth-floor room this afternoon in a nondescript Manhattan warehouse as Facebook founder Mark Zuckerberg took the stage. “Once every 100 years, the way that media works fundamentally changes,” he said haughtily. So began one of the most highly anticipated launch events this fall as Zuckerberg unveiled Facebook Ads, a three-part strategy to help advertisers better connect to customers on the social networking site.

Advertisers can create free Facebook pages for their products and services, build SocialAds that pair display and text advertising with personal recommendations, and access data about how Facebook members use their products.

Building on its strong history of giving Facebook members control over their online profiles and retaining an uncluttered, highly structured look and feel, the company will let users select the advertising that will be displayed on their social networks, creating advertising inventory only in the network of fans that a brand builds virally online. No fans, no ads.

Here’s how it works: First, advertisers can create free pages that play host to the same interactive applications that Facebook members now download in their profiles. A product called Beacon will allow advertisers to display their fans’ activities on newsfeeds — a running update of friends’ activities on a Facebook homepage. For example, if a Facebooker chooses to become a fan of Saturn cars, that fact may appear in the newsfeed.

Second, Facebook announced SocialAds, display and text ads that are paired with interactions with Facebook members. For example, if a user named Jane Doe purchases a pair of Puma running shoes, her friend may receive a social ad — either running down the side of the page or in a news feed — that consists of a banner paired with a notice that “Jane Doe has just purchased a pair of Puma running shoes.”

Last, without revealing personally identifiable information about users, Facebook will provide analytics and reporting to advertisers about consumer behavior. “In a fundamental way, the Facebook Ad platform may change the way people view advertising,” says IDC analyst Rachel Happe. “A brand will have to earn the affiliation of its customers in order to have the opportunity to advertise to a broader network.”

Application developers will watch the system closely. “It does begin to move Facebook into application-specific domains such as iLike and Flixster,” says Jia Shen, CTO and cofounder of RockYou, one of the largest widget makers on Facebook. “Another aspect of concern is how the new types of newsfeeds, placements, and pages do begin to dilute the Facebook newsfeed. We don’t know how Facebook will control the frequency and priority of these new events, but it adds more to the already crowded newsfeed area to contend for space.”

Facebook Ads follows an Oct. 24 announcement that Microsoft (MSFT) will take a $240 million equity stake in the site, valuing Facebook at $15 billion. The company is private and does not disclose numbers, but it is widely reported that Facebook earned a profit of $30 million this year on $150 million in sales. With a $15 billion valuation, that translates into 500 times earnings.

Industry analysts have long wondered how the startup plans to make money. Until now, Facebook’s advertising opportunities have been limited to banner ads that run down the side of pages and smaller ads that appear in newsfeeds. Advertisers can also pay to sponsor groups. Facebook’s move today ups the ante in the fast growing area of brand advertising on the Web. Ad spending on social networks in the United States alone will reach $900 million this year, according to online advertising research company eMarketer. That figure is expected to jump to $2.5 billion by 2011 as advertisers move brand advertising dollars online.

Major competitor MySpace made two advertising announcements of its own this week. On Nov. 5, the Web site revealed new behavioral targeting efforts that will allow advertisers to reach even more specific audiences. If Universal Pictures was able to connect with MySpace users who say they liked movies, for example, the company will now be able to target people who identify that they like movies and also that they prefer horror films. The site also unleashed a self-service advertising tool for small businesses, bands and individuals.

Facebook’s new strategy is a welcome innovation, says Michael Barrett, chief revenue office for Fox Interactive Media, the Newscorp (NWS) division that oversees MySpace. “There’s a lot less competition with Facebook for real ad dollars than with the portals,” he says. MySpace’s advertising efforts are better spent trying to harness ad dollars directed at banner ads on sites like Yahoo (YHOO), MSN and AOL. His take? Any innovation on the part of Facebook will ultimately help everyone profit from social networks.

As of this afternoon, 100,000 new advertiser pages have gone live on Facebook. Logos of Facebook’s 60 advertising partner companies — including Blockbuster (BBI), CBS (CBS), Coca-Cola (KO), Sony Pictures Television (SNE) and Verizon (VZ) — flashed across the screen as Zuckerberg completed his address. Many advertisers don’t yet know what to expect. Jessica Jackley Flannery, co-founder of microlending site Kiva.org, says her colleagues anticipated so much traffic from Facebook Ads that they stopped to consider whether their site could handle it before signing on. “We were on Oprah a couple months back, and we survived the sudden spike then, but this could mean an even bigger gain.”

By Lindsay Blakely

Google today announced two big new partners in its battle to make social networks more open — MySpace and Bebo.

When news surfaced Tuesday of Google’s (GOOG) OpenSocial alliance, MySpace (NWS) and Bebo were conspicuously absent from the list of partners joining the effort to create common standards for social networking applications. So, not surprisingly, was top-tier network Facebook.

OpenSocial will allow developers to build widgets that work across a network of social networks that include Hi5, LinkedIn, Ning, Friendster and now MySpace and Bebo.

“This is the logical next step,” said MySpace CEO Chris DeWolfe during a Thursday afternoon conference call at Google headquarters. “Having an open platform where developers can reach a critical mass of people — we’re at over 200 million users now — is an amazing breakthrough for the developer community.”

Facebook requires developers to write their applications in code that is proprietary to its network. OpenSocial developers will use HTML and Javascript.

“We want to see [OpenSocial] adopted by as many people as possible,” said Vic Gundotra, head of Google’s developer program. “We have reached out to almost everyone in the industry.”

Facebook did not immediately return requests for comment.

By Josh Quittner

Here we go again. Word on the street is that Myspace (NWS) is joining Google’s (GOOG) Everybody-But-Facebook Coalition. That would mean the anti-Facebook alliance, known as OpenSocial, would grow to 170 million users. (Assuming that Myspace has 70 million active monthly users, as per its July press release.)

Google is holding a press conference later today, presumably to make the announcement. In typical Google fashion, it’s asking journalists not to report the news until after 5 p.m. PST — so, we suppose, to give The New York Times and TechCrunch time to break the details of the story first. That’s what happened Tuesday night, anyway.

Note to Google: Embargoes don’t work anymore.

L.A.-based MySpace has officially arrived in Silicon Valley.

But from the look of the social network’s soiree Wednesday night following the first day of the Web 2.0 Summit, the company hasn’t left Beverly Hills far behind. MySpace hosted the invite-only party at the San Francisco Museum of Modern Art to celebrate the company’s new office in the city.

Hired models swilled champagne on a white shag carpet next to the likes of News Corp. (NWS) chair Rupert Murdoch, YouTube founder Chad Hurley, media reps and the occasional tech geek. Waiters passed bite-sized sweets on silver trays, vases of glowing orbs added color to the white modernist tables and screenshots of MySpace pages flickered on the walls.

Earlier in the day, co-founder Chris DeWolfe told the crowd at the Web 2.0 Summit that MySpace’s move north will help the company “build out its tech facilities and hire more engineers.” He said that the media-focused MySpace “will have the best of both worlds” with its new outpost.

Meanwhile, party-goers speculated on what it means now that the social network has moved closer to its biggest rival, Facebook.

“I think MySpace is thinking, ‘We kicked ass on the Web but we’re still not accepted by Silicon Valley so we came to make friends’,” said Evan Williams, co-founder of micro-blogging company Twitter. “Also, they’re probably thinking it’s time to stop flirting with that Facebook floozy.”

Despite the rivalry, MySpace invited a few Facebook reps - like head of PR Brandee Barker - to the party and the two companies did their best to get along.

But most attendees could have cared less.

“Yeah, it’s a good party, but there needs to be more women,” said Phillip Gums, director of JE Model Management. “At a party like this,” he said, “I mean, you know, dim the lights a bit. Invite some women.”

One company’s trash is another company’s treasure. Just weeks after eBay (EBAY) essentially admitted it overpaid for its $3.1 billion acquisition of Skype, another major company has found a better use for the Internet telephone service.

MySpace (NWS) will announce on Wednesday that it will lets its members call each other for free by adding Skype to online chat. MySpace and Skype will share revenue for paid services like calling to landlines or voice mailboxes, but specific details were not disclosed. “This is a great fit. It’s an obvious fit,” says Kyle Brinkman, MySpace VP of product development. “Instant messaging is a fundamental way our users communicate. Integrating Skype’s voice technology will extend the core experience of MySpace users.”

As part of its new alliance, MySpace says it will build Skype right into its social network. Starting in November, members will be allowed to click on a link and make Skype calls to other members. They’ll also be able to link their Skype buddy list to their MySpace profile. Likewise, Skype will prominently display a MySpace window into its application and let its users add their MySpace buddies.

eBay bought Skype in 2005 and has since struggled to find a way to make money off its free users. Skype is free when one Skype user calls another from a computer. It charges people by the minute when they dial to a landline or a mobile number. But the service fell short of expected revenue targets, and eBay took a $1.4 billion write-off on the calling service two weeks ago. eBay is expected to address the impairment charge and how it betters plans to grow Skype’s business during its third quarter earnings call Wednesday.

eBay has also struggled to integrate Skype into its auction site. eBay’s top sellers complained that offering Skype during an auction listing meant it’d force them to be a 24-hour customer service to potential buyers. Wall Street wasn’t sold on the concept either. “When eBay announced it was interested in Skype, it just didn’t make sense,” says Scott Kessler, an analyst with Standard & Poor. “A good rule of thumb for acquisitions is that if you can’t make sense of it in a very short order, than chances are you’ll have trouble with it.”

While MySpace will need to figure out a better way to turn Skype’s largely free user base into paying customers, the Internet phone service may ultimately be a better fit with the social networking crowd. Both parties hope to leverage each other’s networks to build up user base in geographies they’ve had trouble growing. Skype has 220 million registered users and is popular overseas, but the calling service has trouble recruiting customers back home. MySpace, with 110 million active members, has the reverse problem with growing its base outside of the U.S.

The top social networking site launched MySpaceIM, its online chat service, in May 2006 and has grown to 8 million active users with minimal marketing. MySpace’s IM user base still trails far behind the top three online messaging services - AOL (AOL), Microsoft (MSFT) and Yahoo (YHOO). The three top chat services already offer voice calls.

Adding a Skype button is not new to social networking. Both Bebo and Facebook let users download the Internet calling service to include on member pages. Other VoIP clients like Jaxtr and Jangl are also available. MySpace says it’s been in talks with Skype for at least two years about introducing Internet phone calls to its social network. “This is a really tight relationship with Skype that no one else has,” Brinkman says. “This will be a much better experience for our users.”

Yesterday, Techcrunch had a scoop: That Myspace was at long last following Facebook’s lead, and creating an open platform for developers. Mike Arrington cited “information that suggests” the company could well unveil its platform at the Web 2.0 Summit next week.

Today, Valleywag pooh-poohed the story, quoting a “source close to the company.”

Last night, I bumped into a pal who does a significant amount of third-party apps work for a variety of social networks, and he confirmed the VW take. (And if ths isn’t the laziest, most third-hand reporting I’ve ever done, I don’t know what is. God blogging is fun.)

According to my friend, who spoke his connection at Myspace: Myspace was fielding calls all day from excited developers yesterday, and telling them the same thing: Sorry folks, nothing new to report here. While Myspace is continuing to say it will open up its network and share the bounty with apps makers, no deal is imminent, and no timetable has been posted. Instead, the company will be unveiling a “directory of apps”–essentially a PR move to show Joe Myspace that Myspace has a bunch of nifty programs for users to use, too.