That's awful, I'm so sorry for your friend and her baby
I don't know about anyone else, but if I had a big dog, and it killed a little dog, I not only would pay any medical bills for the little dog, and offer to buy them a new baby (not that their baby could be replaced), but I would put the big dog down. Doing anything less is just irresponsible imho. I couldn't continue to even LOOK at my dog if I knew they had killed
I don't even want to hear about it being their "instinct" to destroy smaller dogs, that's baloney
I hope that you can help your friend through this. Is her baby going to be okay?