Facebook denies claims made on Saturday that its latest project is a cheap phone, to compete with the iPhone and Droid. The initial report by Techcrunch, says that Facebook believes the best way it can beat its competitors is by controlling the operating system. This will allow it to integrate deeply into the phone’s contact list and other core functions, which would be impossible on external platforms.

According to the report, Facebook has two people working on the project. Joe Hewitt helped to create the popular Firefox browser, as well as all of Facebook’s web apps for the iPhone. Matthew Papakipos was the lead developer of Google’s Chrome OS before leaving for Facebook. In other words, a Facebook phone is the ideal platform for a combination of their talents.

Facebook vehemently denied the report, saying “The bottom line is that whenever we work on a deep integration, people want to call it a ‘Facebook Phone’ because that’s such an attractive sound bite, but building phones is just not what we do.” Techcrunch responded that the denial seems carefully worded and does not preclude Facebook working with a third party to produce the new phone. For example, INQ and Spotify were thought to be working on a phone of their own last year. The two companies, Techcrunch notes, were brought together by a common investor, Hong Kong-based investor Li Ka-shing. Li Ka-shing, it notes, is also a major investor in Facebook. 
Read More at the Business Journal.