Cooperation presents a major challenge for evolutionary theory: how can competition favor a trait that imposes a cost on the individual expressing it while benefitting another? This challenge has been answered by theory that emphasizes the importance of assortment between individuals that tend to cooperate and those who tend to behave selfishly, or `cheat'. Microbial cooperation remains puzzling, given the generally high genetic and taxonomic diversity of most microbial communities. Many microbial populations rely on shared, beneficial extracellular products for an array of functions in nature. However, when these lineages are maintained in liquid cultures, many are invaded and outcompeted by spontaneous `cheater' mutants that forego investments in these products while benefitting from those produced by neighbors. The apparent evolutionary instability of microbial investments in extracellular products in well-mixed laboratory cultures finds a natural parallel in the phenomenon of toxic microalgal blooms. These extremely dense populations of often free-living microalgae destroy populations of competing microalgae and grazing zooplankton that normally control population densities. Bloom populations of planktonic microalgae are unstructured, and seem ill suited for the evolution of cooperation. In this thesis, I have established a new theoretical framework for understanding the evolution of microbial external goods. This framework highlights the importance of cell-level structure in the distribution of these external products, as well as genetic structuring in populations. This perspective informed an investigation into the social niche of a biofilm-dwelling regulatory mutant of the important biocontrol strain Pseudomonas chlororaphis. In the highly self-structured environment of a bacterial biofilm, a surprising mutualistic association between this mutant and the wild type emerged, underscoring the importance of microbial ecology in understanding the evolution of niche construction. Extending these lessons to the evolutionary problem of exotoxins in free-swimming microalgae yields the novel possibility that fluctuations in density of toxic strains shift a cell-level functioning exotoxin into a true public good that may be exploited by cheaters. I show that exotoxicity can serve cell-level functions in Prymnesium parvum. Despite these cell-level benefits, the existence of nontoxic lineages within toxic blooms hints at a complex interaction between rapid evolutionary and ecological changes in toxic blooms.