There are two basic rules to live by when it comes to other people's children: First, never tell another parent how she should raise her child, and second, never discipline a child who's not your own. Parents have their own way of addressing their child's behavior, and though you may wish wholeheartedly that your friend would rein in her child more firmly, it's not your call. That said, there are ways you can protect your toddler from his rambunctious playmate.
To start, resist any temptation to take out your frustrations on your child's friend. He hasn't done anything wrong other than test the boundaries, which is what toddlers do. No matter how annoyed you are with his mom or dad for not intervening, don't take your irritation out on him. Kids are smarter than most adults think, and they have powerful radar for negative feelings. If he picks up on your annoyance, he may act out even more. Instead, monitor the two children closely as they play to pre-empt any problems. When you see conflict brewing, distract them by playing loudly with another toy or breaking into song. And when your friend's child does manage to do something nice — such as sharing a toy with your child without a fight, for example — tell him how much you appreciate his friendliness. Eventually, just like any other toddler, he'll begin to learn how to behave and get along with others in his playgroup.
You may also want to suggest another location for the playdate. Toddlers are more apt to feel fidgety and act out in small areas (your living room, for example), so moving the date to a large open space such as a playground or park may lessen the opportunities for conflict. With more room to move about, the toddlers can burn off excess energy and social frustrations without stepping on each other's toes, both literally and figuratively. And, best of all, there won't be any toys to throw or books to fight over.
If the situation worsens, however, and your toddler appears completely overwhelmed and intimidated by the other child's behavior, you may want to consider taking a break from this particular playgroup. It may be that this combination of kids is not working well for your child right now, and you aren't teaching your child anything by asking him to cope with a child who's mean to him. Furthermore, your decision to separate the children might open up a dialogue between you and the other parent that could pave the way for a more long-term resolution.