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If FB did come out with a phone, what would their OS be?

Android? Windows X?

Android would be awesome but that would be conceding too much to google.

The post says that it would feature tweaked version of Android.

You didn't actually expect him to read the article, did you?

Android is open source so they can de-Google-ize it. Bing, Bing Maps, Facebook Mail, Facebook Calendar, Facebook Photos, Facebook Market, etc.