I know, its like 6am here but I couldn't sleep since 4am, thinking about this one topic. Google knows about your linking networks, it knows about your traded links and even some of your paid links. During the Organic Site Reviews session yesterday, people were calling out sites they wanted to review. I attended the session because the panel seemed pretty interesting. On that panel included Matt Cutts. Now Matt had his laptop with him and you can see he was doing his own research behind his computer, on the URLs brought up on the screen. While the panelist was looking at site architecture and using Yahoo's Site Explorer to pick on the site links, Matt was using some of his own tools. And let me tell you, it was scary.
He was asking questions, why do you have links from this site. It shows that your part of this and that network. Why are you doing reciprocal linking with this and that group of people? I kept thinking to myself, why do these people keep calling out their sites when they know they did some unnatural link acquisitions? Or maybe they didn't know? Either way, Matt clearly explained that the links are not hurting the sites, they are however not helping it rank in Google. And if they are paid links or if you are spending your time or resources getting those unnatural links - then it may hurt you financially.
It was quiet impressive to see, but also maybe one of the big take aways from this conference. Of course, I knew this before hand. But I have never seen Matt or an other search representation show such a public display of "We know who you are, what you did and why you did it." So maybe this picture is appropriate. :)