So the full details of my involvement and actual relationship with my 'friend' and her child are a bit too complicated and distracting to go into right now. For now lets say that I love kids and have been welcomed to visit and be part of my friend's child's life and that there are good reasons why this child is important to me...
Anyways I visit her daughter regularly, and most of the time my friend's niece is also there, as my friend babysits the niece regularly. However, I've seen a consistent pattern of her giving her own daughter preferential treatment over the niece. For example if her daughter screams about the niece having a toy she will tell the niece that it's her daughter's toy and to give it back, even if the niece clearly had it first and daughter is only wanting it because the niece had it. Considering everything in the house is her daughters that amounts to her daughter always having the right to take toys away from the niece which is unfair. Similarly it's not unheard of for the niece to accidently antagonize the daughter and daughter lash out. Both are in the wrong, but it seems the niece gets more of the scolding and the daughter unfairly justified for lashing out without being called on it.
Separate from that she has made comments to me implying I could 'have' the niece or that the niece was less pleasant to have around then the daughter, but in situations where the niece could potentially overhear her. Niece is young enough that these comments mostly go over her head, but it's still not acceptable in my mind, she will eventually put it all together and feel less cared for.
I know the standard response is 'talk to the mother and explain your feelings." However I'm going to say the mother is unlikely to respond well to a direct discussion on the topic and...well lets just say I think it unlikely to help and quite likely to prove counter productive. I have been trying to more subtle point out that I feel she is being unfair to her niece, and her daughter as well since in the long run this sort of preferential treatment will hinder the daughters ability to learn to play properly with kids which will be a problem as she grows up.
In the meantime though I've constantly had the same situation when I was with the girls and was the main one watching them while their mother was in the house but preoccupied while I played with the kids. The daughter and niece will get in a disagreement where either I feel both are equally wrong and should be equally treated, or the daughter is clearly in the wrong. However, if I try to fairly handle the situation as I think is best, based off of extensive experience volunteering with many child, the mother will show up and will again favor her daughter in the situation. It's a pattern so consistent I feel afraid to even try to properly tell the daughter to be fair to the niece because there is a chance of the mother's intervention and both of us undermining the other. And yet just going along with how I know the mother would handle the situation seems unfair to both children and against what I feel is a right way to handle kids.
I don't know how to be fair and consistent without being contradicted by the mother, and I won't fight her directly in front of the children since she is the parent and the true authority figure in the situation. How can I properly tell the daughter she was in the wrong or that she needs to share a toy the other niece clearly had first and the daughter is only taking out of standard 'I want it cause you have it' kid logic.