Facebook (FB) has decided to change up the order in which stories appear in your news feed, prioritizing posts from your friends over content from publishers.
The move is aimed at making the time lines of Facebook's 1.65 billion monthly users less cluttered after years of Facebook -- a key holding of Jim Cramer's Action Alerts PLUS charitable trust -- courting third party content. In a way, Facebook's newsfeed suffered from too much success.
"When we launched News Feed in 2006, it was hard to imagine the challenge we now face: far too much information for any one person to consume," Facebook said in a statement. "That's why stories in News Feed are ranked -- so that people can see what they care about first, and don't miss important stuff from their friends. If the ranking is off, people don't engage, and leave dissatisfied. So one of our most important jobs is getting this ranking right."
While the change may benefit the user experience, it could also have an adverse effect on media publishers who Facebook had been increasingly courting to provide content for the social media platform.
The algorithm changes, which are expected to go into effect this week, will result in a drop in referral traffic and reach for some pages that rely on content published to their Facebook pages for clicks. Referral traffic is the method websites use to report where traffic going to a particular site came from. Operations like The New York Times or Buzzfeed could see the referral traffic from Facebook decline as a result of these changes.
"The specific impact on your Page's distribution and other metrics may vary depending on the composition of your audience," the company's statement said. "For example, if a lot of your referral traffic is the result of people sharing your content and their friends liking and commenting on it, there will be less of an impact than if the majority of your traffic comes directly through Page posts. We encourage Pages to post things that their audience are likely to share with their friends."
Facebook has a history of changing its time line algorithm in ways that hurt publishers. Instead of slotting posts chronologically, Facebook now puts what it thinks its users are interested in at the top of their feeds, sometimes to the detriment of publishers whose content a specific user may not be familiar with.
But Facebook is not completely publisher unfriendly. It recently began paying publishers to produce content for its nascent Facebook Live video platform.
On the other end of the spectrum is rival social media company, and AAP holding, Twitter (TWTR). Its courtship of media companies has been unrivaled, as the micro-blogging service aims to be the top place for users to go to to seek out and share the latest news.
With that in mind, earlier this year Twitter teamed up with the NFL to broadcast live games this upcoming season, allowing users to watch content on the same platform on which they comment.
But even as Facebook moves away from catering to media companies, Twitter may not be able to fill the void, according to Action Alerts PLUS senior analyst Scott Berman.
"Facebook keeps getting better, and Twitter doesn't," Berman said in an interview. "Whatever Facebook does to engage users will come at the expense of Twitter."
Facebook shares were basically even at $114.63 on weak volume trading on Thursday.