Yup, Facebook is working on a Flipboard-like mobile news reader: Report

Rumors that Facebook (s FB) is working on a news-reading product gained more ground Sunday night when the Wall Street Journal reported that Facebook has spent over a year building a mobile app that “displays content from Facebook users and publishers in a new visual format tailored for mobile devices.” The service is internally called Reader, according to unidentified sources.

While the WSJ report is scant on concrete details, it says that the current iteration of Reader resembles Flipboard and is designed for iPhones (s AAPL) and iPads. And the company “has explored different ways to highlight news content to users, including showing public posts that are trending on the site. The idea, the person said, is to create an experience that encourages users to dive deeper into content and spend more time with Facebook” — and to engage with more advertising.

It’s unclear how Facebook’s product would surface content — whether users could add their own RSS feeds, as with Google Reader, or whether the app would primarily turn up content for them, as Flipboard and Zite do, with a focus on what’s trending on Facebook and what Facebook friends have shared.

The latter seems more likely. My colleague Eliza Kern wrote earlier this month about the reasons she wouldn’t want to use a Facebook-branded RSS reader. “I don’t want my RSS reader to be social — I have Twitter and the existing Facebook for social news,” she wrote. And with RSS products like Feedly and Digg Reader popping up to replace Google Reader (which dies July 1), Facebook would face a lot of competition in that area. But any news-reading product that Facebook ultimately releases will battle against the established players in the space — namely Flipboard (which now has over 50 million users), Zite, Pulse and Google (s GOOG) Currents.