The feature was first mentioned on October 13: “Using Chrome as our login manager has a number of potential benefits.
Explore these tradeoffs and decide what to do about the login manager.” The code was checked in on December 14: “An early version of this change is finally in. It’s not ready for daily use yet, and we haven’t gotten the network picker on there or anything yet, but at least we’ve got a baseline in there. I’m filing issues for the follow-on work.”
There are lots of potential benefits to having users log into machines via the browser. In particular it makes syncing easier and furthers the notion that you can log into any Chrome OS machine and have exactly the same experience as you would on any other machine. The fact that users can’t download any software to Chrome OS computers furthers this experience.
But it’s also clearly interesting from an identity standpoint. Facebook and Twitter are both making strong plays as the defacto online identity for hundreds of millions of Internet users. Facebook Connect in particular is becoming a very popular way for third party sites to easily add identity and login features to apps (it’s what we use on our own CrunchBase).
But people using Chrome OS devices will be logging into the Internet first and foremost with a Google account, or via Friend Connect (which currently allows signin via Google, Twitter, Yahoo, AIM, Netlog, OpenID, etc.). By centralizing authentication once, Google can then use the same Friend Connect credentials to automatically login to sites that support it.
If Chrome OS becomes popular, it will be a very powerful weapon for Google to compete with Facebook Connect.
See here for a look at how Mozilla is thinking about all of this.