It’s popular to cast black-hat SEO in moral terms. The popular understanding (made popular by Google), is that black-hat techniques are necessarily bad for the Internt, even if they benefit the spammer. That puts them squarely in the “immoral” category. But as this lengthy analysis from Aaron Wall illustrates, there’s another view: on all fronts, Google is perpetuating its monopolistic positioning, and the only way to delay that process is by manipulating Google’s algorithm.

Google’s competitive entrenchment takes two forms: they’re capturing a larger percentage of the economic value they produce (whether by finding ways to raise their prices or by charging for things they used to offer for free), or they’re creating subsidized competitors to existing businesses.

Google has long had expertise in price discrimination: their AdWords ranking algorithm incorporates click-throughs, for example, which by definition maximizes Google’s revenue. What they’re doing now is moving down the conversion funnel. Instead of selling pageviews, they’re selling newsletter signups (through a recent AdWords experiment) or financial leads (Google Advisor) or plane tickets and hotels (Google Flight Search). They’ve been doing this for a while; Froogle was around for a few years before being shut down and then rebranded. The difference is that now they’re capturing more of the value of the transactions they’ve expedited.

Which is not, strictly speaking, a problem. In its early days, Google could afford to subsidize business on the web in general. Now, they can’t afford to destroy indepdendent web-based businesses, but they can certainly squeeze a bit more. And if one effect of that squeezing is that a few layers of affiliates get cut out, that’s not a disaster for web usability. In fact, the net result should be a more mature web. Benign affiliate programs like Amazon’s (which tend to subsidize unobtrusive product endorsements from experts) will thrive; affiliate programs that rely on layers of landing pages won’t.

Google doesn’t just know how to charge a lot; they’re experts on giving things away for free. Back before he became Google’s chief economist, Hal Varian was busy writing about how to win a “standards war” (PDF) by, among other things, commoditizing the complement. If Google can identify something that leads to or stems from an AdWords click, they want to make it as cheap as possible, ideally free. That’s something they’ve done with analytics, with file conversion, with on-page optimization, browsers, mobile operating systems, and more.

But for that plan to work, Google needs to capture the added economic value they’re creating. And to do that, they need to be the only scalable source for targeted clicks.

This turns black-hat SEO into a huge strategic threat for Google. At this point, the algorithmic side of things is an arms race: Google isn’t as good at spam as spammers are, so it has to catch up rather than keep up.

But on the narrative side, Google is way ahead. There’s just one Google, but no black-hat or gray-hat SEO practitioner has anything approaching that market share. So if Google’s going to win, it’s going to win on PR: by raising the social cost of black-hat (and widening the definition to anything scalable enough to compete with AdWords). For Google, the path of least resistance isn’t to shut down a link network or upgrade their duplicate content filters: it’s to make sure people don’t want to tell their friends they do black-hat SEO for a living, or can’t tell their clients what kinds of strategies they’ll use.

This will have negative spillover effects on the SEO community. But it’s inevitable given Google’s economic incentives. A normal company doesn’t make a big deal about its own marketing team violating the company’s terms of service; when Google’s double-outsourced SEO campaign (we speculated that this happened last week), Google’s eventual response was pretty wrathful. That’s Google’s PR plan: making the average Internet user see Google’s closest direct competitor as literally outrageous.

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The Black-Hat Conundrum: Maintain a Monopoly, or Subsidize Spam?