According to the BusinessofVideo.com blog, Microsoft is shaking up its audio- and video-software business:

Open source conspiracy theorists warn that Microsoft's effort to make the code behind .Net, its software-development framework, open to the public to view — but not modify— is a trap. The goal? It's aimed, they claim, at tainting Mono, an open-source implementation of .Net, with the software maker's intellectual property. And why does this matter? Mono, you see, allows programmers to easily port software meant to run on Microsoft's Windows to Linux and other competing operating systems. But really, might Microsoft's critics be giving it too much credit for cleverness?

Microsoft's bullheaded foray into the music-player market, despite Apple's complete domination, seems as silly a proposition as entering the seemingly impenetrable videogame console business in November 2001. The only problem is that the success of Microsoft's Xbox is a fluke which owes much to Sony's missteps and runaway sales of Halo. The Zune, in all its redesigned glory, has no such killer app — just the same music, more or less, as Apple's iPod. And the Zune's main selling point?

Microsoft's golden child, Halo 3, continues to break videogame sales records by netting more than $300 million during its first week on store shelves. [Shacknews]

A patent holding firm is suing Google, AOL, Microsoft, and Yahoo over its patent for "Systems and methods for transacting business over a global communications network such as the Internet." Or rather, for using automated bidding systems to sell online advertising — in other words, where all the money is. At least the company's a clever patent troll. [InformationWeek]

Why, in this age of lightning-fast publishing, do members of prestigious national publications like the New York Times and the Wall Street Journal still agree to embargoes? Microsoft, it seems, has placed an embargo on its new Zune models, but Gizmodo already has photos, and the Silicon Alley Insider, too, has already scooped its much-larger business-news rivals, with reports that Microsoft will introduce new Zunes with flash-memory storage, competing with Apple's iPod Nano line. Jay Greene from BusinessWeek, Jeff Leeds, music reporter at the Times, and Nick Wingfield of the Journal, we hear, were among the reporters scribbling away at the Microsoft launch event in the Seattle area today. And what did they get in exchange for agreeing to sit on the news?

Videogame enthusiasts are freaking out over rumors that Halo's proud papa, Bungie, is disentangling itself from Microsoft. But would it matter? Losing a franchise that put the Xbox console on the map and recently sold $170 million its first day would be devastating for a Microsoft division still fighting to operate in the black. But if the two seperate, Bungie would walk away with its independence while Microsoft would walk off arm and arm with Master Chief, since it owns the rights to the Halo franchise. It could find another studio to pump out sequels. As with movie studios, the videogame-playing public pays attention to individual games, not the developers who make them.

"There can't be any more deep technology in Facebook than what dozens of people could write in a couple of years. That's for sure." — Microsoft CEO Steve Ballmer. Of course! Steve, we eagerly await Microsoft's Facebook killer. [Times Online]

Could Google hit $2,000 a share? Henry Blodget thinks so, but I'm not so sure. That would value GOOG at $750 billion — roughly the same as Microsoft ($279 billion), General Electric ($431 billion), and News Corp. ($70 billion) added together. And that's assuming that none of those companies grow at all — a highly unlikely proposition. Could Google be the first company worth a trillion dollars? Maybe, but I'm not placing any bets in the "first-to-a-trillion" Valleywag office pool. Remember how well predictions of a trillion-dollar market cap worked out for AOL Time Warner? (Photo by AP/Paul Sakuma)

Microsoft has bolstered its Internet commerce capabilities by purchasing Jellyfish, an innovative comparative shopping site, for an undisclosed sum. Jellyfish will remain a standalone entity, but Microsoft's Web team has signaled they will be borrowing Jellyfish's technology for use across the software giant's websites. Why? Jellyfish introduces a compelling new twist to comparison shopping. Listed retailers only pay Jellyfish when purchases are made — the more they pay, the higher they rank. In turn, Jellyfish kicks back half of its commission to the buyer, effectively lowering the price. It's an intriguing business model, taking a page from Google's ad-ranking technology and applying it to e-commerce. Just one problem: Microsoft's unfortunate track record of crushing the life out of small, innovative companies it acquires.

The new editor at TechCrunch, Erick Schonfeld, has gotten a little IPO-crazy in these heady days of Bubble 2.0. The best guess we've seen on a Huffington Post valuation is $60 million which, for a media company, is a drop in the bucket. We can't remember a tech or media company going public with a valuation anything like that. Huffington Post is the most unlikely IPO candidate since Wired in 1996 — and Wired had substantially more revenues and a real magazine business. Maybe we were onto something with the whole cheese thing. More likely? An acquisition.

When it rains, it pours. And eBay's recent billion-dollar writeoff of Skype, the VOIP startup it bought two years ago, could have an impact on Facebook's negotiations to sell a stake in the social network, at a high valuation, to Microsoft or another large backer. (Both Bernhard Warner and Kara Swisher make this observation, which I'll attribute to great minds thinking alike.) Skype's financial failure is a sobering reminder of the risks of overpaying for a startup. And all of a sudden, Microsoft CEO Steve Ballmer is playing diffident, saying Facebook "might be a fad." But what may be forgotten in this latest skeptical turn to the hype cycle is that underpaying has risks, too.

Steve Ballmer, CEO of Microsoft, thinks Larry Ellison, his equivalent at Oracle, is overpaid. Ballmer says of Oracle's compensation: "I find it interesting and probably not that considered a decision to do what [Oracle have] done." (Ellison received about $74 million, while Ballmer received less than a million dollars.) Which is probably true, but I doubt Ballmer would be talking about it if Microsoft's own compensation committee hadn't said that he's "probably underpaid." Or if he wasn't already worth $15 billion, thanks to his holdings of Microsoft stock. Ballmer thinks increasing the value of his 4 percent ownership of Microsoft is enough motivation — but why is the CEO even bringing up the issue?

Microsoft's MSN portal is losing money. Lots of money. "Google's profit run-rate is $4.4 billion on $16 billion of revenue. Yahoo's run-rate is $750 million, on $7 billion in revenue. Even fellow-cellar-dweller AOL is printing cash: $1 billion profit pace, on about $2.1 billion of revenue. All those companies are making money hand over fist. Microsoft is shoveling it down a rat hole." [Silicon Alley Insider]

The Electronic Software Ratings Board's control over a videogame publisher's content extends beyond deciding if a violent game is safe for minors to play. It also governs in-game advertisements. Lately everyone from behemoths like Microsoft to the Lilliputian startup 3D Realms have been accumulating infraction notices — which could lead to fines — for failure to comply with advertising guidelines. [1UP]

Despite the software giant's aspirations, Microsoft's older Windows XP is still the newer Windows Vista's biggest enemy. It's cheaper, a known quantity, and "good enough." The software developer has, in some measure, conceded this by allowing PCs to be preloaded with the older OS for an additional five months and, in emerging markets, until the middle of 2010. Copies of XP will also continue to be available at retail. [News.com]

Why should Microsoft invest $300 million or more in Facebook? Apparently because Facebook CEO Mark Zuckerberg, spotted in the Seattle area earlier this week, is nicer than Bill Gates. And nice people deserve money! That's Fortune writer David Kirkpatrick's theory, anyway. [Fortune]

In a Senate hearing on Google's acquisition of DoubleClick Thursday, Microsoft general counsel Brad Smith said Google wants to "record almost everything you see and do on the Internet and use that information to target ads." Well, of course. But with its rumored plans to try to buy Yahoo or Facebook, doesn't Microsoft desperately wish it could do exactly the same thing? Who are they trying to fool? U.S. senators, apparently. [Financial Times]

Yes, the tiresome comparisons between movie and videogame revenues have resumed: Microsoft's Halo 3 scored $170 million in sales on its U.S. debut. The biggest weekend box-office opening was $151 million for Sony's Spider-Man 3. We look forward to the day when the phenomenon of videogames outselling movies is unremarkable. [Next Generation]

Microsoft's gaming division has struggled to pull itself out of the red since its inception back in 2001. Its current console, the Xbox 360, has been plagued with manufacturing defects that could cost the company up to $1 billion to fix. But Microsoft expects its blockbuster Halo 3 to end its financial woes by tallying an estimated $140 million upon its release today — a blockbuster some will no doubt tiresomely liken to first-day box-office figures. [BBC News]