I was talking to a friend yesterday who was at a conference where Demand Media’s CEO spoke, and he stated that nobody asked the big question: “what if google decides they don’t like you anymore?”

Then I got thinking about how Google torched Squidoo after Jason Calacanis went on his public campaign to rebrand it as spam. But today under the same level of scrutiny, how is Mahalo (which scrapes millions of 3rd party content listings *without any editorial filter*) not spam? Squidoo at least donates $10,000 a month to charity. Mahalo just “borrows” your content without permission and keeps all the cash.

In the past Google hated content scrapers pretty bad. How bad? Well a guy named Teeceo used to make scraper sites, and here is how Matt Cutts described his work:

In the chat room, I said hello to teeceo, but I know the stuff that he was doing and it’s shoot-on-sight. I think anyone who is blackhat knows (or should know) that I’m happy to talk to anyone, but that we’ll still take action on the spam we find.

Imagine taking that approach to hunting search spam all day long, and then ignoring the *fact* that Mahalo is scraping millions of third party listings and using them as content with no editorial filtering.

Then I started thinking about why the Google spam team could ignore something as outrageous as Mahalo, especially when it was built by a guy who was a false anti-spam evangelist. Is it because Jason is a good guy? No. Is it because there is some actual editorial vetting of the content? no. Is it because Google is getting a cut of the AdSense revenues? Google doesn’t need the short term cash flow (look at all the affiliate AdWords advertisers they just torched), so that is too cynical of a view.

Yes Google wants display inventory (their biggest opportunity for 2010 according to the quarterly call), and these “content” websites have already given themselves over to Google as inventory. But it must be something deeper than that. So I started thinking about it from a longterm strategic level…

Google won’t penalize sites like Mahalo (even though they blatantly violate Google’s guidelines) because Google *wants* to use the works of companies like Mahalo, Demand Media, and Aol to lower the value of other content and bankrupt a lot of the traditional media companies.

Why would Google want to do that?

There is excessive duplication in the marketplace. The faster that duplication is driven out of the marketplace the more desperate companies will be to cut deals with Google. And while there is a down market Google can drive companies out of the market and just claim that it was the economy that did it (much like how Mahalo used the down economy as an excuse to fire most of their editorial staff and replace them with content scraping robots).

Once a lot of media companies are bankrupted, the market is far more efficient, and there are fewer mouths to feed, that means Google can squeeze greater profits margins out of the media ecosystem by getting a fatter cut of the ad revenue.

Currently this shift is risk free because almost nobody understands how the marketplace works. Sure Paul Kedrosky and Mike Arrington blogged about the search results getting spammier, but until you frequently read the above listed sequence on sites outside of the SEO industry there is no damage to the Google brand in them turning the internet into a cesspool.

Once it starts harming the Google brand then I suspect them to act quickly and decisively. And sites like Mahalo will see a sharp drop in traffic. Jason better milk it while he can. The clock is ticking.

Related posts:

1. Why Mahalo (and Other Content Scrapers) Render Google’s Spam Team Flaccid
2. Spam vs Mahalo: Matt Cutts Explains the Difference
3. Spam vs Mahalo: Matt Cutts Explains the Difference
4. Mark Cuban’s Mahalo Wants Your Blood (And Gets it TOO!)