In short, Google updated the time stamp on their Can competitors harm ranking? help document. It was assumed by the author of the story that the content changed as well, but it did not. The content did change over a year ago and we reported that but the truth is, on the negative SEO claims by Google, Google's Matt Cutts always said it was possible.
I mean, back in 2007 we reported Matt Cutts as saying that it is possible, but very hard. Now it is easier but still very rare, according to Matt Cutts.
In the Hacker News thread, where this SEW story was brought up, Cutts went in to the thread to defend Google again.
One of the big reasons we say softer things (rather than "it's impossible") regarding the idea of negative SEO is that we have seen people to pretty crazy things to steal/hijack domain names in the past, like the bizarre history of sex.com: http://en.wikipedia.org/wiki/Sex.com
People talk about negative SEO far more than people actually attempt it, because you're never quite sure what effect (say) pointing some links to a site might have--it might help the site instead of hurting it--plus it's typically a better use of your time to develop your own site.
Matt then says later on that virtually all the cases of negative SEO he has personally looked into, the vast majority "didn't hold up." Matt wrote:
Like many of the reports of "successful negative SEO" that we've investigated, the claims didn't hold up. In this case, we had already caught the site in question for spammy links going back years and years--long before the negative SEO campaign started.
A poll we ran in 2010 had most SEOs believing negative SEO existed.
Should we worry and take Matt's advice on this and not worry too much?
Forum discussion at Hacker News.