There are certain industries and niches on the web that are somewhat reserved for black hat SEOs, SEOs that go above and beyond and push the line of what is outside of the Google guidelines. Some people call these areas PPC, standing for porn, pills and casinos.
Many know that it is hard for "white hat" SEOs to compete in these spaces. But it doesn't mean that Google doesn't try to clean it up. Google did release an algorithm a couple years ago targeting black hat SEO spam. They have taken manual actions of link networks in very spammy regions.
Today, John Mueller of Google answered a question around white hats competing in these space and if Google is aware and takes action on some of these areas.
In a Google+ hangout at the 8:57 mark into the video, John addressed one of the questions saying "it [black hat spam] is not something we completely ignore." He added that Google simply doesn't step away and "let them all fight it out." But he added that sometimes it is "kind of hard to find out what the right kind of action should be."
Here is the embed at the start time of when he said this:
Here is the transcript:
It is not something we completely ignore, where we say, oh, they are all black hats therefore let them all fight it out. That is not the case. It is something we do watch out for, we do try to find ways to take action there. But there is a lot of black hat activity in there [famous people porn], so it makes it kind of hard to find out what the right kind of action should be. I think that is always tricky.
It reminds me of when Tim Mayer back in his Yahoo days said on stage when questioned about this, "don't bring a sword to a gun fight" or was it a knife. That sounded like Yahoo stepped away those days, but maybe not.
Forum discussion at Google+
