Has Facebook Demoted Applications News Feed Stories?

When Facebook launched their platform last year, one of the primary drivers behind many developers decision to launch on the platform was the much prized position of being placed in the news feed. Instantly application stories flooded the news feed becoming one of the primary sources of spam on the website. Since then it appears that Facebook has adjusted the news feed algorithm so that practically no application stories are displayed.

One application developer I spoke with said that they’ve seen one news feed story in the feed in the past 30 days. While the live news feed is flooded with application stories, very few of them seem to be making it to the main feed. If Facebook Connect sites get the same sort of exposure, there will be less incentive for sites to integrated. Granted, Facebook claims that Facebook Connect has increased engagement on developers’ sites but is that enough of an incentive for implementing the service?

So far I’ve had a pretty good experience and have begun to see an increase in engagement but the real purpose for integrating with Facebook Connect is the possibility of expanding my reach. It’s still far too early to give a fair judgement of Facebook Connect (in contrast to the platform which within a day was a huge success) but if application stories are truly being demoted, Facebook will have lost the biggest incentive for developers.

What’s the value of Facebook’s platform versus competing platforms when the viral channels have been eliminated? Ultimately there is still the tight integration and display within the Facebook chrome which reduces the barrier to entry but Facebook Connect already removes the primary barrier to entry on traditional websites: registration forms.

Without the news feed is there really a significant incentive for building within Facebook instead of integrating notifications and invites from your Facebook Connect enabled site?