Yesterday, Search Marketing Expo released a snippet video of the interview with Google's Matt Cutts at SMX Advanced on nofollowing affiliate links.
Personally, I think this is Matt encouraging people (not strongly) to nofollow any link where you might earn morning, including affiliate links. But since most sites who do affiliate marketing have no idea what a nofollow attribute is, Google made sure to say they handle the majority of them.
Here is the video:
Here is what Matt said:
We handle the vast majority of affiliate stuff correctly because if it is a large enough affiliate network we know about it and we handle it on our side. Even though we handle I believe the vast majority of affiliate links appropriately if you are at all worried about it, I would go ahead and just add the nofollow because you might be earning money from that.
Should you panic and nofollow your affiliate links immediately? No. But on a slow day, why not?
Forum discussion at Google+.