A Sphinn thread links to a post named Was The Google Mayday Update A Complete Failure Then?. The blog post goes through examples on how even though the May Day update was suppose to really downgrade the rankings of sites like Mahalo, that site just doesn't go away.
Mahalo launched in 2007 by Jason Calacanis, who has been known to go at SEOs. So as you can imagine, SEOs are very critical over Calacanis's property. Aaron Wall called the site out as spamming Google's guidelines. Even Danny Sullivan did a detailed analysis of Mahalo and how they push the line of breaking Google's guidelines.
One would have thought that May Day would have put the site to rest but it has not.
Alan Bleiweiss made an interesting and likely correct comment on the Sphinn thread, he said:
I've said this a few times for similar issues - Matt Cutts would say - there's other signals that outweigh any negative. I say this because that's his response to me when I asked him about sites showing up in top organic position even though they distribute "free page counters" that embed links to their site in the footer of thousands or tens of thousands of trash sites. (free page counters by the way, that they promote through AdWords).
In this case, the premise would be that because Mahalo has millions of pages of content, and all those "valid" other signals of "authority", it justifies Google not slapping them for the crud.
Except I would venture to guess there's a million pages of that crud on their site :-)
So, in this case, do you think it is special Google treatment or is the good outweighing the bad?
Forum discussion at Sphinn.