Windows Live provides the gateway, the authentication layer, and the proxy for REST calls over the HTTP/1.1 protocol to Windows Live Contacts and other services.
Windows Live Contacts, along with other Windows Live services, such as Windows Live Messenger, Windows Live Expo, Windows Live Spaces and Windows Live Storage, will integrate with the Windows Live services.
Windows Live handles the authentication process by confirming the caller's identity so that Windows Live Contacts can identify the outside caller and the target Windows Live Contacts address book.
After checking to make sure that the caller has the appropriate consent that it needs to execute the call on the user's address book, Windows Live Contacts processes the API call and returns the data to the caller.
The address book owner can revoke the permissions given to the caller at any time. Additionally, Windows Live can revoke entire domains at the authentication layer, if necessary.