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Valleywag thinks that this move, which effectively guts one of the top performers in app-king Slide's portfolio, is the reason that VCs won't fund more Facebook applications. Because if Facebook is going to kill an incredibly popular app, then what's the point of funding the other ones?

That would be terrible! But that's not why Facebook app funding is drying up. Facebook funding is going away because:

1. No one's figured out how to turn apps into real money makers.
2. Any apps that do make money are going to be the ones with really massive reach.
3. The time to build apps with massive reach from scratch expired many moons ago.
   

That doesn't mean there isn't room for developers who want to build small, lightweight apps, or investors who want to bet on them: But better to gear up for land-grab opportunitites on brand-new or even yet-to-be-opened territories. Like, say... mobile operating systems.

See Also:
Jeff Bezos Makes Yet Another Angel Investment: Social Gaming Network