Amid all of the speculation on the effects of adding content from Google Plus and Picasa to Google’s search results, another back story is beginning to emerge: Why have Google and Facebook never reached a search agreement?

Federated Media Founder John Battelle has been following some of the back-and-forth on his Searchblog, and, as he points out, “When high-stakes deals fall apart, both sides usually claim the other is at fault, and that certainly seems to be the case here.”

An unnamed source familiar with the Facebook side of talks with Google in 2009 told Battelle:

Senior executives at Google insisted that for technical reasons, all information would need to be public and available to all. The only reason Facebook has a Bing integration and not a Google integration is that Bing agreed to terms for protecting user privacy that Google would not.

Not so fast, according to Google Senior Vice President of Global Communications and Public Affairs Rachel Whetstone, who told Battelle:

We want to set the record straight. In 2009, we were negotiating with Facebook over access to its data, as has been reported. To claim that we couldn’t reach an agreement because Google wanted to make private data publicly available is simply untrue.

Further adding to the confusion, another source, who was closer to the Google side of the 2009 talks, told Battelle Facebook insisted that Google not use publicly available Facebook information to build a “social service,” adding that the two sides had already agreed that the search-engine giant would not have access to the social network’s “firehose” of private content.

Publicly available Facebook data include brand pages, as well as Facebook open graph data such as status updates and likes that appear on third-party sites.

As Battelle points out, this is content that brands want in front of as many eyeballs as possible, and excluding it from Google’s search results was a deal-breaker.

Was Facebook overly concerned with a competing social product from Google back in 2009, two years before Google Plus debuted? Or is there more to this story?