Microsoft is inking a deal to run its search results and keyword-linked ads on Facebook, CNBC reports. Make no mistake: Facebook employees share every bit as much disdain for Microsoft's lame Web efforts as the rest of Silicon Valley, despite the company's $240 million investment. So this news is unwelcome, and painful. But inevitable. What caused it?Facebook's slapdash decisionmaking about ad placement on the site, a direct result of CEO Mark Zuckerberg's endless dithering on the subject in the process of redesigning, led to the Microsoft search deal. In the end, Facebook decided to kick Microsoft's tacky banners off its homepage and users' profile pages, in favor of its own targeted Social Ads. That was a violation of Facebook's advertising agreement with Microsoft, of course, requiring a renegotiation of the deal. Microsoft, of course, was ready with its quid pro quo: Search advertising, a market Facebook has yet to tap, but was likely to eager to try to explore itself. Instead, it's running Microsoft search results, and Microsoft search ads, both of which are considerably less attractive than Google's because they draw a smaller base of users and advertisers. A hard lesson for Zuckerberg: Every decision has consequences, and pursuing his whims has costs.

Here are all the talking points you'll hear about Kevin Johnson's departure as the chief of Microsoft's sprawling Platform and Services Division — and what to say about them. The failed Yahoo bid killed his prospects of becoming Microsoft's CEO. Perhaps, but Steve Ballmer, who is more to blame for the Yahoo debacle, wasn't going anywhere, and Johnson may not have been prepared to wait. Johnson was charged with competing with Google in search and advertising, and he failed. And you would have done any better? Facebook took Microsoft for everything it's worth in striking its deal for Microsoft to invest and sell ads on the social network — and that's Johnson's fault. True enough, but Microsoft's $240 million investment is pocket change for the software giant. Enough with the cocktail-party chatter. Here's why I think Johnson really left.

The only word to describe Facebook cofounder and CEO Mark Zuckerberg's keynote at the company's second annual F8 developer conference.? Awkward. In this clip, Zuckerberg tries to demonstrate how useful Facebook platform applications are by comparing iLike to MySpace, Zynga to Las Vegas and Causes to — wait for it — Al Gore. Clearly, Zuck's speechwriters meant the whole thing as a kind of joke — the kind they should have known Zuck wouldn't be able to deliver. As usual, Zuck throws his employees under the bus for his inability to speak in public: "Not sure where the team came up with these examples. They're pretty funny." Yes, Mark, we're not cringing at you, we're cringing with you!

If a company's worth what someone will pay for it, than new rumors put Facebook's value at more than $6 billion. An investment banker told Silicon Alley Insider he sold employees' shares representing 0.1 percent of the company for a valuation "north of $6 billion" at a price in the "mid- to upper-seven figures," which SAI takes to mean $6 million or more. Earlier reports suggested private bankers were trying to move Facebook stock at a $4 billion valuation, so this may be a good deal for the sellers. What happened to Facebook's $15 billion valuation? That was set by a sale of preferred shares to Microsoft, whose purchase of $240 million in preferred shares came with some downside protection and a global ad deal. (Photo by CJ Sorg)

Adult site promo businesses boast of "high payouts" to webmasters who bring customers to their partner sites, but nothing like the $500,000 Slickcash.com had to hand over to Facebook. SlickCash settled the "hacking" suit, in which they were alleged to have hit up Facebook's servers at least 200,000 times, presumably to advertise LesbianTraining.com and other sites in their stable through the Friend Finder feature.

Today at its F8 developers' conference, Facebook will announce a plan to give favored widgets more abilities to promote themselves on the site. The first two apps to get "preferred" status will be Causes and iLike. What does being a "preferred" widgetmaker mean? A source tells us that in the short term, Facebook will simply promote preferred apps in users' News Feeds more often, increasing their chances of spreading from friend to friend. "Basically, it is a subsidy program for their favorite darlings," says our source. Causes is an app backed by former Facebook president Sean Parker; iLike is a startup backed by Marc Bodnick of Elevation Partners, who is also a private Facebook investor and the brother-in-law of Facebook COO Sheryl Sandberg. Our source also tells us that after top tier preferred apps, there will be a middle tier of "certified/approved/vetted" applications as well.

Why is Facebook only going to earn $300 million in revenues this year, despite 80 million active users on its site? Not because Facebook has outsourced much of the ad-sales work to Microsoft. Not because Facebook's Social Ads have miserable clickthrough rates. It's because at Facebook, making money isn't the priority. "Our focus is on growth — we believe this is the moment people are joining social networks," Sandberg told a crowd at Fortune's Brainstorm Tech conference. "Then it's monetization to support that growth." Sandberg, a White House veteran, didn't stop there with the Washington-quality doubletalk.

Today at Facebook's developer's conference, social games widgetmaker Zynga will announce a $29 million round of funding — the company's second — led by Kleiner Perkins, the VC firm that backed Amazon.com and Google. Zynga has also acquired virtual world app YoVille and added former Electronic Arts creative exec Bing Gordon to its board. The company makes games like Poker and Attack, a Risk clone, for Facebook and other social networks. Zynga founder Mark Pincus told the Wall Street Journal that Zynga has 18 million monthly visitors and adds another 450,000 users a day. Kleiner Perkins partner John Doeer said his firm went ahead with the Zynga deal because of that kind of growth, telling the Journal Zynga has "cracked the code" on how to develop games that go viral fast. But really, how Zynga adds new users isn't all that complicated, clever or sustainable.

A dating site billing itself as the Facebook of kink has played host to the accidental debut of actual Facebook user Becky Spraggs as a model-for-hire. According to Spraggs, photos from her Facebook account were used to make a fakester profile at FetLife.com, listing her ex's mobile number as her agent's with the come-on "I want to be used and abused." The profile elicited 50 phone calls offering her work. FetLife's founder John Baku says he removed the profile within 30 minutes of hearing the complaint — not from Spraggs, but from a reporter. As much as we journalist types like looking at your naughty Internet bits, next time someone accuses you of being kinkier than you want to admit online, maybe try hitting up the tech support guys first?

AdWeek's Brian Morrissey reports that "Microsoft banners will run across the site, but will no longer appear on the homepage and user profiles." Instead, Facebook's largely automated direct-sales operation will sell placements for one large slot or two smaller slots on the right side of each page. These ads might be video ads as well as static text over image ads, Morrissey reports. A source tells us Facebook's ad units are also changing to a more standard size — a move that will make them easier to sell.

Shriek! New Facebook! New Facebook! Boxes and "Application Tabs" and some sort of news feed/Wall mash-up that's impossible to read. I always fear change, and this is why.

This partial screenshot from a tipster's Facebook homepage needs no explanation. He's since found the "ignore all" button. Here's the full version:

Bitter widgetmakers may want you to believe venture capital for the Facebook platform is all dried up, but don't believe it. Not when there's visionaries like former AOL CEO Steve Case still around. Case has joined a $5 million funding round led by Grotech Ventures for widgetmaker Living Social. Living Social builds apps like BookSocial and BeerSocial for Facebook, MySpace, Bebo, Hi5 and Orkut that recommend products for their users based on their friend's tastes. On second thought, Case's investment may be the clearest market signal yet that investment money for widgets is soon to disappear altogether.

COO Sheryl Sandberg and PR chief-turned-platform politician Eliot Schrage, Facebook's no-fun adults, are fully in charge of Facebook. The latest evidence? Facebook's second annual F8 developers' conference has another "hackathon." But unlike last year's all-night session, it hardly deserves the name. It starts at 3 p.m. and ends at 11 p.m., presumably so Schrage can go home and get a good night's sleep before calling reporters on the East Coast to tell them of Facebook's fabulous new platform achievements. Developers are still raging about the notion that Schrage, a PR guy, is in charge of Facebook's development platform. At a recent party in San Francisco, Ben Ling, the technical guy behind the platform, was spotted rolling his eyes when Schrage's name came up.

One possible explanation for the disappearance of ads from Facebook's redesigned site: Facebook didn't want to place advertisers' messages on not-quite-ready pages. So much for that theory: Ads have reappeared on Facebook's beta site, placed to the right instead of the left. Why the sudden turnabout? Likely because there's an internal war raging about the placement of ads on Facebook, with stubborn founder and CEO Mark Zuckerberg the most resistant. Expect more coming and going of ads on Facebook: We hear the company is testing entirely new ad products, which may replace the current Social Ads shown here.

Facebook will follow its F8 developers conference this Wednesday with another 8-hour "hackathon" for third-party developers and Facebook engineers to work on widgets. This will be fun to watch, because those two groups kind of despise each other right now. Last spring, Facebook began taking a hardline stance against widgets that spam users or violate privacy rules, even going so far as to temporarily remove popular apps like Top Friends and Super Wall from the site this summer. Then, a beta test of Facebook's new profile revealed a new feature that made Slide's Top Friends redundant. Slide responded cheerfully to the news, but one exec at a widgetmaker told us that if Facebook keeps up the regime of enforcement and copycat apps, venture capital for Facebook-focused startups will dry up. Of course, we hardly expect a brawl or even public arguments during the "hackathon" — passive-aggressive Twitter notes and other forms of repressed resentments, anyone? Developers, save yourselves the future therapy bills. Just do what Facebook wants and build the kind of apps its employees describe in the video below. That seems easier.

Developers have been raging about Mark Zuckerberg's redesign of Facebook's user profile pages, at last unveiled today. But advertisers might soon find reason to fuss, too. The new design has no conventional ads — not the banners sold by Microsoft; not the smaller, demographically targeted ads sold by Facebook in its Social Ads program. True, there's some white space on the right where ads might go; but the page's HTML source code doesn't have any hooks for ads in that area. Should advertisers be horrified that Facebook is taking some of its most-viewed inventory — users' profile pages — off the market?

I'm not sure what you guys wrote in the comments section of yesterday's item about Courtney Love's attack on Ryan Adams regarding all that money someone stole from her. But Ms. Love sure noticed. On her Myspace page today, she remarks, "I had a very heavy evening but since we are becoming terrifyingly great, I'm happy to oblige you Gawker people for about oh one more millisecond." Her full message after the jump.

If you can't do the time, don't post photos on Facebook celebrating the crime. That's the harsh lesson 20-year-old college student Joshua Lipton learned after a judge handed him a two-year sentence for severely injuring a woman while driving drunk. Photographs on Facebook of Lipton partying in an orange jumpsuit labeled "Jail Bird" proved he was without remorse, a prosecutor argued, and the judge agreed, calling them depraved. Lipton's attorney, Kevin Bristow, argued that the photos showed Lipton's confusion after the accident and noted that he'd written apologetic letters to the crash victim and her family. Right. What we suspect really confused Lipton: The idea that anyone over the age of 21 might actually know how to use Facebook.

Little has been heard from Slingshot Labs, the startup "incubator" News Corp. formed in February, in the months since its creation. The $15 million fund for spinoff ventures did succeed in keeping MySpace CEO Chris DeWolfe in place: We hear that he made it a quid pro quo before signing a new, lucrative contract with Rupert Murdoch. He's not the only MySpace employee Slingshot played a part in keeping down in Los Angeles. We hear Nick Granado, a top engineer behind MySpace's iPhone version, first flirted with a job at Facebook, then worked briefly at Imeem, before getting lured back with a gig at Slingshot.