Under cover of darkness last night, Facebook founder and CEO Mark Zuckerberg announced on the social-networking site’s blog that it would “return to our previous terms of use while we resolve the issues that people have raised.”

Oh, this is just too good to resist. Therefore, BoomTown shall not tarry in our ongoing job of busting the chops of the young Facebook leader, whose minions have actually–and I am not joking here–given him the nickname: The Wizard.

Well, the Wizard obviously had to pull back the curtain last night and show some serious mea culpa to the people, before they got out the pitchforks.

That’s due to the controversy Facebook has been embroiled in this week about changes it recently made to its Terms of Service that gave the company unusually sweeping rights over customers’ content and privacy.

While Zuckerberg had said in his first post about the issue that Facebook was not in the content-stealing business, the strong language in the ToS sent the usual suspects into a major meltdown over the possibility that the young geek had gone into full-scale evil mogul mode.

As if!

In fact, Zuckerberg has been ensconced in his Silicon Valley lair for years now, counting down until he knows precisely everything about everyone’s drunken college days!

Until D-Day then, here is my translation of his latest backtracking post:

What the Wizard wrote: Update on Terms

Today at 10:17 pm

Translation: OK, I have reached my limit of being yelled at by Sheryl and Elliot, have had my usual breakfast of Red Bull and Frosted Flakes–they’re grrreat!–and am ready to eat some major digital crow this morning.

I mean, night, which is my morning, because I actually slept through all this noise today about this whole Terms of Service “controversy.”

What the Wizard wrote: A couple of weeks ago, we revised our terms of use hoping to clarify some parts for our users. Over the past couple of days, we received a lot of questions and comments about the changes and what they mean for people and their information. Based on this feedback, we have decided to return to our previous terms of use while we resolve the issues that people have raised.

Translation: Did you know crow is delicious if you eat it with a little Bosco on top?

More to the point, I would just like to assure you that we have taken our lawyers–who idiotically rewrote our ToS to give us ownership rights to the Bible, “American Idol” and everything Bill O’Reilly utters–and sent them over to our friends at MySpace, because their owner, News Corp. (NWS), already owns two of those three [and also this site!].

What the Wizard wrote: Many of us at Facebook spent most of today discussing how best to move forward. One approach would have been to quickly amend the new terms with new language to clarify our positions further. Another approach was simply to revert to our old terms while we begin working on our next version. As we thought through this, we reached out to respected organizations to get their input.

Translation: As in: More yelling by Sheryl and Elliott and more Fedexing of lawyers to MySpace HQ in Beverly Hills.

But after we calmed down, we all decided the best course of action was to shoot ourselves in the right foot to stop the bleeding from when we shot our left foot before.

We are, of course, completely out of feet now, so if these hijinks continue, sooner or later, someone is going to lose an eye. By someone, I mean, um, me.

What the Wizard wrote: Going forward, we’ve decided to take a new approach towards developing our terms. We concluded that returning to our previous terms was the right thing for now. As I said yesterday, we think that a lot of the language in our terms is overly formal and protective so we don’t plan to leave it there for long.

Translation: Facebook, of course, never had any intention of stealing content and copyright! Perish the thought! After all, that’s the job of Google (GOOG)!

By contrast, ours is to collect incredibly embarrassing photos of everyone in the United States until one of them runs for president, and then our nefarious scheme to control the world begins.

We were planning on blackmailing the world for one billllliiiion dollars then, but Microsoft kind of forked over 15 times that without any pressure.

Still, we would like to own Palo Alto, Calif., and get free parking 24/7, so there will be demands!

Until then, enjoy the sheep-throwing. Mwaahahahahahahaha! (Quick visual: I am petting my white cat right now with Ernst Stavro Blofeld-like evil glee, and am, of course, cackling.)

What the Wizard wrote: More than 175 million people use Facebook. If it were a country, it would be the sixth most populated country in the world. Our terms aren’t just a document that protect our rights; it’s the governing document for how the service is used by everyone across the world. Given its importance, we need to make sure the terms reflect the principles and values of the people using the service.

Translation: Not to be completely and utterly arrogant or anything, but we just passed Pakistan, and those Brazilians better get ready to samba.

By the way, once we get to No. 1–look out, China!–we plan on decreeing that everyone in the world speak Pig Latin and that forthwith it will be flip-flop Fridays.

Also: Esyay, Iway amway anway alienway omfray anotherway anetplay.

What the Wizard wrote: Our next version will be a substantial revision from where we are now. It will reflect the principles I described yesterday around how people share and control their information, and it will be written clearly in language everyone can understand. Since this will be the governing document that we’ll all live by, Facebook users will have a lot of input in crafting these terms.

Translation: Ybay ethay ayway, “Otay Ervesay Anmay”? It’sway away ookbookcay.

In other words, I am sure you will make delicious contributions, after which Facebook will “invite” you to our world-wide HQ to share in a lovely meal.

Especially those Winklevii. I look forward to the twins coming by soon!

What the Wizard wrote: You have my commitment that we’ll do all of these things, but in order to do them right it will take a little bit of time. We expect to complete this in the next few weeks. In the meantime, we’ve changed the terms back to what existed before the February 4th change, which was what most people asked us for and was the recommendation of the outside experts we consulted.

Translation: To my credit, I did give in much quicker than with the Beacon ad snafu. And you thought I learned nothing during that debacle!

And, by outside experts, I mean Microsoft (MSFT) CEO Steve Ballmer, who yells much, much louder than Sheryl or Elliot combined.

What the Wizard wrote: If you’d like to get involved in crafting our new terms, you can start posting your questions, comments and requests in the group we’ve created–Facebook Bill of Rights and Responsibilities. I’m looking forward to reading your input.

Translation: Here’s my first pass, based on the U.S. Bill of Rights, Amendment I:

Facebook shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition Faebook for a redress of grievances.*

*Exceptway, ithway ymay ompletecay iscretionday, enwhay Iway
ecideday otherwiseway.

Former Yahoo tech star Qi Lu (pictured here) is poised to take on the big job of being Microsoft’s top digital executive, according to several sources inside and outside the company.

The appointment could be announced by Microsoft as early as next Monday.

A variety of details is still being ironed out, though, including whether the well-regarded techie Lu will be “paired” with another executive at Microsoft (MSFT) with more general business experience.

While Lu has managed large teams while at Yahoo (YHOO) and also huge projects, he does not have advertising sales and media experience that will be a big part of his purview at Microsoft.

In that job, he will be the boss of three strong digital execs at the software giant: Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group; Yusuf Mehdi, whose online services portfolio includes marketing, online audience business development and product management for MSN and the search properties; and Brian McAndrews, the SVP for the advertiser and publisher solutions group.

That executive partner could be some higher-ranking Microsoft exec or even CEO Steve Ballmer himself.

Elevating McAndrews is also a possibility, as he has also wanted the digital chief job and could decide to leave after not getting it. (He also would not be a bad choice for Yahoo’s new CEO.)

McAndrews was the CEO of aQuantive, an ad company bought by Microsoft for $6 billion last year.

As I have previously written, Lu would be a different choice for the post than many had expected.

In picking a serious tech-oriented executive over a more media-centric one, a dichotomy that Ballmer has been puzzling over, according to several people with whom he has spoken, he is clearly staking out an even more head-on fight with Google (GOOG).

But since a lot of Microsoft’s future rests on winning in the search and search-advertising space and trying to catch up with its techtastic Silicon Valley archrival from way back in the race, Lu is also well suited for the position.

Lu was EVP of engineering for the Search and Advertising Technology Group at Yahoo, where he ran all development initiatives for its search and monetization platforms. He was at Yahoo for a decade.

Importantly, Lu will definitely be a draw in bringing in top talent to Microsoft, especially from Yahoo.

Microsoft already grabbed another top Yahoo search exec, Sean Suchter recently.

And it is reportedly in a competitive bidding war with Google right now for yet another top Yahoo engineer.

Ballmer (pictured here), who led the now-defunct takeover bid for Yahoo and who has indicated a strong interest in buying only Yahoo’s search assets, could almost be seen as bypassing it all by sucking the talent right out of the place instead.

That might be a good move, since Yahoo’s board, while under intense Wall Street pressure to do so, is still debating whether to strike a deal with Microsoft to sell off its search and search ad business for massive guaranteed ad revenues.

While board member Carl Icahn has been pushing that deal, others on the board are still dubious that decoupling search from Yahoo is the right strategic move and believe it could leave the company at the mercy of Microsoft.

Yahoo might already be, especially if it keeps losing critical engineering talent to Microsoft. Being able to convince talent like Suchter and Lu to switch is a very bad sign.

Before he left Yahoo earlier this year, Lu was on the staff of the IBM Almaden Research Center, and worked at both Carnegie Mellon University and Fudan University in China (he also got degrees from both places).

And, in the kind of cred Microsoft likes, Lu holds 20 U.S. patents.

He left Yahoo after becoming dissatisfied with all the turmoil there, quitting in June, without another job lined up.

There has also been speculation that Lu would take a position as CTO of Facebook or even return to China for a tech job.

The well-respected Lu certainly has a multitude of choices, but the chance to lead money-laden Microsoft’s digital efforts–as it suits up for battle with Google–has been perhaps too hard to resist.

BoomTown has been poking around to try to figure out who Ballmer would choose for the digital head, ever since the man who used to be in charge, Kevin Johnson, departed in July for Juniper Networks (JNPR), after the software giant’s takeover bid to buy Yahoo failed.

I raised Lu’s name in a post several weeks ago as Ballmer’s top choice.

Several people close to the situation say the aggressive CEO has been keeping the deliberations close to the vest.

On an interesting side note, another one of Lu’s reports at Microsoft would be Harry Shum, corporate vice president of Search Product Development, who was his classmate and friend at Carnegie Mellon.

Please see this disclosure related to me and Google.

Yesterday, BoomTown opined that Microsoft was nearing a decision on who would become the head of its digital efforts.

And, according to several sources and some puzzling by me–if an agreement can be reached–I think that Microsoft (MSFT) CEO Steve Ballmer’s top choice is former Yahoo tech star Qi Lu.

While this is by no means a done deal, Lu is just the kind of top tech exec that Ballmer and Microsoft would warm to over a more media-centric choice like former Yahoo COO Dan Rosensweig or former AOL head Jon Miller.

Lu was EVP of engineering for the Search and Advertising Technology Group at Yahoo (YHOO), where he ran all development initiatives for its search and monetization platforms. He was at Yahoo for a decade.

If Ballmer manages to pull off the hire of Lu–on the heels of already grabbing another top Yahoo search exec, Sean Suchter, which I reported on yesterday–the aggressive exec could almost be bypassing a Yahoo search partnership he has long sought by sucking the talent right out of the place instead.

Ballmer is like Edward in “Twilight,” attracting top-notch search execs to Microsoft’s Redmond HQ, as if they were geek versions of Bella.

Lu would be a different choice for the post than many had expected, with a much more technical background than one in online media or advertising sales.

But since all of Microsoft’s future rests on winning in the search and search advertising space and trying to catch up with its archrival Google (GOOG) from way back in the race, Lu is also well suited for the position.

If Lu takes the job, he will be the boss of three strong digital execs at Microsoft: Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group; Yusuf Mehdi, whose online services portfolio includes marketing, online audience business development and product management for MSN and the search properties; and Brian McAndrews, the SVP for the advertiser and publisher solutions group.

Lu is known as as solid manager, but he is also called a very nice man and unusually humble for a tech star by many, which could be a good influence on Microsoft.

Before Yahoo, Lu was on the staff of the IBM Almaden Research Center, and worked at both Carnegie Mellon University and Fudan University in China (he also got degrees from both places).

And, in the kind of cred Microsoft likes, Lu holds 20 U.S. patents.

He left Yahoo after becoming dissatisfied with all the turmoil there, quitting in June, without another job lined up.

Since he left Yahoo, there have been rumors that he might be headed to Microsoft, but not in such a prominent job.

There has also been speculation that Lu would take a position at Facebook or even return to China for a tech job.

The well-respected Lu certainly has a multitude of choices, but the chance to lead money-laden Microsoft’s digital efforts–as it suits up for battle with Google–is compelling.

BoomTown has been poking around to try to figure out who Ballmer would choose for the digital head, ever since the man who used to be in charge, Kevin Johnson, quit in July, after the software giant’s takeover bid to buy Yahoo failed.

Several people close to the situation say Microsoft’s Ballmer has been keeping the deliberations close to the vest–perhaps because so many of those he has targeted have declined to consider the job.

But this week, many sources both inside and outside the company have told me that Ballmer is close to announcing his choice.

Annoyingly, one source has decided to play a digital version of “The Da Vinci Code” with me, dribbling out clues–more technical than media, very well liked in Silicon Valley, humble–about the candidate, which he wanted me to solve as if I were Robert Langdon and on the hunt for the progeny of Jesus.

Well, my solution is in: Microsoft’s most promising digital Holy Grail is Lu.

On a related note, bizarrely, the day after this column broke the story about Lu’s leaving Yahoo, I caught him by accident in the background of a video I was doing at a Harvard Business School event honoring Facebook’s Mark Zuckerberg.

You can see him at 4:14 minutes in the video, laughing at me, as I bother Greylock Partners VC David Sze and make a bad pun related to former Yahoo exec Jeff Weiner’s departure from Yahoo.

Here’s that video:

Please see this disclosure related to me and Google.

I suppose that’s the reason Microsoft is not loaded for bear and headed back down to Sunnyvale to make another play for Yahoo right now.

Not even after Jerry Yang orchestrated activist investor Carl Icahn’s defenestration, by inviting him on the board at Yahoo (YHOO), where he will be 100 percent silenced.

Not even after the stranger-than-fiction shareholder vote miscount (oops–we thought no meant yes!).

Not even after Yahoo stock’s consistent flirting-with-the-teens price.

Not even after its second-quarter results made it clear that it’ll be an uphill battle for Yahoo management to achieve the aggressive financial plans outlined when the Internet company was fending off Microsoft’s takeover bid.

So while opportunity is surely knocking for Microsoft (MSFT), especially if it wants to reach its stated goal of competing with Google (GOOG) in the online space, the software giant prefers not to answer the door right now.

Sources close to Microsoft’s thinking say the company is waiting for the right time, when Yahoo’s stock price is even lower and when Wall Street completely gives up on management, to figure out the next move.

Instead of acting, according to sources, and taking more flak for those actions, the whole brain trust up there is taking a breather and biding its time.

(In fact, many top Microsoft execs are on vacation, which is why August is a good time for Yang–who is himself headed to China for the Olympics–not to worry about a hostile attack.)

The strategy? Sitting in the grass–waiting, watching and making plans.

But, in truth, Microsoft cannot really make plans–except for the vague we’ll-keep-coming-and-coming in the online search and display business motto–until it decides the best way to reach its intended goals.

The first order of business, of course, remains the selection of a digital czar, which was promised by Microsoft CEO Steve Ballmer after top exec Kevin Johnson quit unexpectedly several weeks ago.

As BoomTown previously reported, the top inside contender is SVP Brian McAndrews, who came to Microsoft via its pricey $6 billion acquisition of aQuantive.

And Microsoft’s future-of-software guru Ray Ozzie remains a favorite choice of the troops.

But, sources said, Ballmer is still interested in a possible high-profile outsider coming in to shake things up.

The problem is, most such execs see the job for what it is–a potential tar baby that will only muck their careers up and produce no easy victories.

“Who wants the headache?,” said one outside exec who has been contacted by Microsoft. “While there might be upside there, the downside is much more significant.”

Thus, sitting very still for now might, indeed, be Microsoft’s best choice. It certainly is a lot less messy.

All Yahoo needs now is for former Florida Secretary of State Katherine Harris to show up and start recounting votes.

It could happen, given all the crazy characters who have been drawn to the much-beleaguered Internet company like a magnet, in 2008.

It’s almost as if there is a voodoo curse on Yahoo (YHOO).

So, you didn’t think the digital gods would let it have more than one weekend of good news, did you?

No, they will not, it seems.

After the annual meeting last Friday, which went off without a hitch and, more importantly, without an expected major shareholder vote against the company’s management and board, you could feel a palpable easing of tension among Yahoo leadership and its exhausted PR team.

By Monday, the Yahoo shareholder kerfuffle–in essence, one major shareholder of Yahoo has asked for its outside tabulator of investor votes at the annual meeting for a recount–had landed with a thud.

The problem is how shares were tallied in the Yahoo annual meeting, specifically around whether a group of votes withheld by Capital Research Global Investors was not counted, counted incorrectly or even voted incorrectly by the investor.

Parent company Capital Research & Management confirmed that it had asked Broadridge Financial Solutions, a Lake Success, N.Y.-based financial services company that does securities clearing and processing, to investigate whether those votes were correctly counted on behalf of its Capital Research Global Investors fund.

Capital Research Global Investors–one of two funds separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings, and Capital World Investors owns 9.8 percent.

Capital Research Global Investors is run by legendary media investor Gordon Crawford (pictured here), who has become disenchanted with Yahoo over the last year.

Because of that, sources close to the fund’s thinking said Crawford had recommended that the fund withhold votes from CEO Jerry Yang and some other board members.

It’s not clear whether that actually happened or, if it did, whether the votes were tallied properly.

That’s because Yang, for example, only had 14.6 percent withheld, with 85.4 percent voting for him.

The votes withheld seemed low to Capital, considering Crawford’s large stake and how many shareholders have been deeply unhappy with Yahoo management this year.

Instead, overall results for Yang and the Yahoo board were mostly better than last year.

Everyone is investigating, of course–from Capital Research to Broadridge to Yahoo, which does not do its own tabulation, although it has hired an outside proxy solicitor to manage the process–to try to find out what’s what.

It is likely there’s a nonsinister reason for the voting results.

And there might be a lot of possible explanations, but I am partial to blaming the confusion that followed after activist investor Carl Icahn pulled his proxy fight a week before the meeting and made nice with Yahoo.

Unfortunately, Icahn’s golden proxy ballot was already in the hands of investors, many of whom might have voted for it and then had that vote essentially voided.

Wrote one BoomTown reader and Yahoo shareholder:

“I hold 23,000 shares of YHOO. I had 17,000 on the date of record. I voted to ‘withhold all’ … I think twice. Then I voted for all of Carl’s team. Now I have learned that the Carl votes did not count and a day AFTER the annual meeting I received my new ballot. I wonder how many other people were disenfranchised??? Who can I complain to?? Is this how Jerry got his support??”

Another commenter on the site also wrote:

“As a stockholder, I was curious *which* of my proxy letters actually was counted–I received four. One was from Icahn, the other three were from Yahoo. The last of which arrived today, August 4th. Does this strike anyone as odd?”

Actually, Yahoo’s twisting journey passed odd a long time ago and is now headed toward “The X-Files” territory.

(So let’s all triple-hope Yang’s upcoming trip to China for the Olympics goes smoothly. Have a good time, Jerry, we’ll be back here counting!)

OK, now we’re cooking with gas at Yahoo’s annual meeting in San Jose, as various shareholders–mostly small ones–come to the microphones to give Yahoo a piece of their mind.

The room has filled up more, about one-third to one-half full, with the top Yahoo (YHOO) leadership arrayed at a table up front like an Italian wedding.

First up, longtime Yahoo activist shareholder Eric Jackson asked Yahoo Chairman Roy Bostock to step down, noted that Yahoo had overplayed its hand with the Microsoft bid, wondered about Yahoo President Sue Decker’s time problems (too many outside boards) and questioned the worth of Yahoo’s deal to sell an asset in Japan.

Yahoo, of course, did not agree with Jackson! At all!

“No,” said Bostock about stepping down, also noting that he was woefully underpaid for his board service, given all the activity over the last year related to Microsoft (MSFT).

Next up, a shareholder asked about Yahoo’s poor performance compared to Google (GOOG).

Yang’s answer: We’re trying!

Next, a shareholder supported Yang, noting that Yang did co-found the company. But then he kind of suggested Yang perhaps leave the company for a “cathartic” time.

The same shareholder also compared Bostock’s defense of Yahoo’s behavior with “a girlfriend who is trying to convince the world that she initiated the breakup.”

That made Yang smile.

Later, Bostock added: “I would not compare Yahoo’s relationship to Microsoft to a romantic one.”

The next question was related to China and Yahoo’s thorny history there. Yang had addressed the issue earlier and added that the company was working hard to improve its efforts related to human rights.

While one former employee and shareholder called Yahoo “rude” not to entertain more questions from investors, another shareholder called Microsoft “a green-tentacled monster,” I think, which provoked laughs and clapping.

A question was then asked about advertising and competing with Google-owned DoubleClick. Decker noted that Yahoo’s Web-based approach is better.

One shareholder noted the lack of women on the board (there is one), and a shareholder justifiably complained that only one-third of the directors did not show up and also not enough of the board owns stock, such as Ron Burkle (who was apparently in Europe at another commitment.)

Perhaps of everything that went on at the annual meeting, which was mostly nothing, perhaps that was the most salient point of all.

But–as many readers have requested–they will all be available in their entirety over the next two weeks in this column.

Here’s Part 6 of 6 of our interview with Rupert Murdoch, chairman and CEO of News Corp. (NWS) (owner of this site and the conference), in which he answers questions from the audience about competitors, the future of newspapers, China, more Sen. Obama, technology and magazines.

Here are the rest of the videos from the interview:

Part 1
Part 2
Part 3
Part 4
Part 5