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Last September, Google said they will penalize sites that do widget links that are not nofollowed. So if you have an embed this widget on your website and that widget carries along a "powered by with anchor text link" and you do not nofollow that link, you can be penalized.
John Mueller of Google said in a video hangout this week at the 54:28 mark into the video that Google may automatically nofollow those links for you, internally, because Google knows that many of those who embedded those widgets on your site long ago aren't going back into the widget and manually adding a nofollow.
Of course, your new instructions for the widget should show a nofollow in the link code but stuff in the past, it might be hard to have those who embed your widget change it.
So if Google didn't penalize you for those links, it may feel that Google did when Google automatically discounts all those links internally anyway.
John said:
We recommend that people put nofollow on links like that [widget links].For large (something) we notice those things too, espesially those things that are larger scale and we just nofollow them on our side.
So essentially we crawl these sites, see these links and say oh, these are all the same widget, we will just nofollow of of these links for them.
Here is the video embed:
Forum discussion at YouTube.
