I'm still very troubled by this paid links issue after all these years!
I agree it's Google's right to penalise or promote any page/site in its natural listings, which represent Google's subjective opinion of relevancy.
However, the idea that all paid links are bad/"evil" is wrong in so many ways:
- Paid links pre-date Google.
- There is no machine-readable standard for labelling a paid link. I'll repeat that - there is no machine-readable standard for labelling a paid link.
- Labelling paid links fails the "Does this makes sense in the absence of search engines?" ethical test. The answer may well be "Yes". (Where the answer is "No", I agree paid links are spam).
- Labelling paid links fails the "Would I do this if search engines did not exist?" test. In fact, you have to know that Google exists, and that they mind about paid links, in order to label those paid links in the non-standard way that Google asks you to label them. This is perhaps my biggest beef with Google's approach to paid links - they actually violate one of Google's published Webmaster principles.
- What does "paid" mean anyway? An actual exchange of cash? If you look at the top results for any hugely commercial field, say "car insurance", it's hard to believe that there is no commercial influence in the results! When all that a company does is commercial, then every link (positive or negative) to that company's site is commercial in nature.
I understand that a market in paid links arose because of Google's algorithm.
However, the irony is that in responding to that market by asking all publishers to label paid links in a non-standard way, Google violated its own principles. It started to ask publishers to adapt what they published to suit Google (because Google existed), and called them spammers if they didn't. That's the wrong way around. It's the spammers that do stuff purely because Google exists!