In the past any large company could use subdomains as an effective reputation management strategy. As eBay and others have aggressively used subdomains to dominate branded AND unbranded search results, and Google has improved their sitelinks technology, any relevancy gain by treating subdomains as a separate site has gone away. Google is going to start treating subdomains like subfolders, and limit the number of results from any site to two.

There is still an upside to using subdomains because they allow you to feature standout content, but that upside relates to how marketable the content on that subdomain is, whereas in the past using lots of subdomains allowed eBay to get 20 of the top 30 listings for some queries, even if the subdomain was recycled garbage.

This move adds value to regionalizing sites and creating niche brands (like MobileCrunch), since currently I believe ebay.ca and ebay.com will be seen as two separate sites. If sites are too aggressive with regionalization or creating niche brands and start double dipping that way then Google might eventually look to devalue that move as well, although that will be more of a challenge because it would create a lot of collateral damage.

Official announcement by Matt Cutts at Pubcon, reported first by Barry.

Google, already has a near infinite number of data points to compute relevancy for the active parts of the web, and is looking to gather even more user data information. The WSJ has background on the story:

Google is preparing a service that would let users store on its computers essentially all of the files they might keep on their personal-computer hard drives -- such as word-processing documents, digital music, video clips and images, say people familiar with the matter. The service could let users access their files via the Internet from different computers and mobile devices when they sign on with a password, and share them online with friends.

They also mentioned the C word:

Google will likely have to address copyright issues. Allowing consumers to share different types of files such as music with other users could trigger the sort of copyright complaints the company already faces over videos on its YouTube video sharing site. One person familiar with the matter says Google is discussing with copyright holders how to approach the issue and has some preliminary solutions.

This is going to move Google up the value system by

• giving them a unique data source
• giving them unique relevancy signals
• keeping users locked into their services and using their services longer
• shift power from copyright holders to Google
• eventually allow Google to sell content (if they want to - the Google Video trial did not work too well)

But there will also be a big upside, especially to marketers and content creators who are willing to give away high value content to gain mindshare and marketshare. By creating content that people would want to store and share on Google, you get cheap or free exposure for your business interests.

As DaveN said, Google eventually has to move away from links because links are too polluted. What better relevancy signals can they come up with than attention data and how often people cite and share data ON THEIR NETWORK? Feedburner, Google Reader, iGoogle, Gmail, and Youtube are already part of the Google network. Soon your hard drive will be too.

If your Google AdWords quality score is too low, Google will allow you to compete in the auction with reasonable ad pricing ONLY if you give them your conversion data:

The arguement from my representative was that your pages are terrible so if we can’t see how well you convert our users then we will need you to pay $10.00 per click to make up for your low QS (my average keyword price was $2.75 at the time). That of course would have put me out of business.

Once I caved and allowed them to snoop on my conversions they allowed me to keep buying at or near my original keyword price.

If your copyright content is being uploaded to YouTube, Google will protect you if you upload your copyright content to Google:

I see a monetization in the works.

a) All of the big companies will make the effort to supply Youtube with good qualities of their videos. Movies, Shows etc.
b) YouTube gathers all that stuff, and builds the largest database of top quality videos.
c) Youtube offers the media companies to enter into a partnership. “Hey guys, you already have the stuff uploaded…why not sell the premium content to our millions of users?

If people are scraping and stealing your content Google will eventually allow you to rank for your own work if you sign up with Google Webmaster Central and register your copyright work.

After all your sites are registered with Google, how easy will it be for them to force compliance on smaller webmasters? Given the indiscriminate attitude exhibited when Google recently hand edited PageRank scores, it seems there is good reason to not register with the borg.

Search Engine Land recently listed a bunch of sites that had their PageRank scores manually edited for selling links. Of course, if you are the publisher of one of these sites, you don't care about an algorithm relevancy score so meaningless that it is edited by hand. You care about traffic.

Rankings Never Changed

SERoundtable was on the list of sites which saw their toolbar PageRank scores reduced, but I just looked at some of the terms they were ranking for, and they are still right at or near the top of the results for everything they were ranking for, even the competitive terms.

Traffic Matters, PageRank Does Not

Watch the Compete.com traffic stats for the sites listed in that Search Engine Land post. Google even provides large sites like the NYT over 20% of their traffic, so if these sites were really penalized you will see a plunge in traffic. If you do not see a plunge in traffic across these sites then toolbar PageRank scores are proved irrelevant as a measure of quality and trust.

Since When Are Publishing Networks Bad?

Many network blogs had their PageRank scores dropped too. Again, you can simply check the traffic stats to see if there is any real impact, or if Google is just polluting their Toolbar PageRank scores.

Since Google is demoting PageRank's viability as a site's global authority score perhaps this is a time for Yahoo to bring back WebRank, or Ask to launch something like CommunityRank. The Google-webmaster relationship is fraying. This presents an opportunity for whoever wants to take it.

Publishing is About Networks

If Google is penalizing blogs for being part of a network of sites, how long until they penalize IAC for owning 20 travel sites? Or Monster.com for owning 100 thin lead generation education sites? Or BankRate for owning white label sites with similar names? Networks have always been a part of publishing based business models.

It seems someone or something inside of Google is melting down. Choppy times ahead for webmasters worldwide.