Yeah, a Microsoft controlled version of FaceBook would probably see a lot of drop off in their user base. Personally, I have struggled to get interested in FaceBook despite a lot of trying. I just don't find it relevant, why do I want to know if someone I haven't spoken to since school has poked, slapped or thrown a sheep at someone?!!!.
I much prefer relevant and informative social networking sites, like what we are trying to do here with YourMarbella.com ! (Shameless plug hehe) .