Once the free parking was pulled from MySpace, 50% of every team was laid off and all of the momentum was pulled from the company.
Working with .Net was not an issue, and in some cases it was a benefit.
There were however huge cultural problems with FOX. Here are a few.
Developers used were given one display, not two. Screens were 1280x1024. I bought my own displays and had my manager order a custom computer for me with dual video card support.
Fox was a closed source company, and so when we were working on Open Tech like Oauth and OpenSocial gadget servers, we had to do it as closed source software. We had no peer review. It made it really hard to ship and test something when you don't have linkedin, google, bebo, and twitter reviewing your code. On top of that when those companies found a bug, we had to re-implement that code in .Net. On top of that MySpace and .Net were well designed for strong typing and those types work a bit different than Java.
It didn't take a lot of time to port so, we kept doing it, but you have to think about this, you are at a race with a company like Facebook who had zero profit motive at the time, and billion in funding and a ground up stack. Meanwhile MySpace was just clearing out cold-fusion and we had really old blogging platforms that could not just get ripped out.
We also had management that didn't want to piss off users and so we would have 2 or 3 versions of the site out there, and we required users to upgrade to new versions.
What MySpace had was Cultural Debt, and a fear of destroying what they had. Facebook won because they were Socratic to the core.