Thank you crobb, Leosghost.
I have a feeling that this has been tested in bits and pieces throughout the year. The past one year has been dead still for us in terms of revenue and traffic - and possibly not downhill only because we tried very hard to engage with our users and speak to them regarding what they wanted. We took suggestions right down to the placements on the page - what appealed to them - what was easy to use. Made positive changes which increased traffic. Later near the end of 2010 we incorporated social sharing - mostly automated but the content would go through variety of spam tests before being broadcasted to our social pages - first to twitter and from there to facebook and linkedin. In the last four months we have gathered up about 4000 fans on facebook - and the page is kept vibrant with personal comments and acknowledgements whenever someone likes any of our content.
You are right crobb, dealing with people directly is a bit messy. But clearly Google is throwing the "just content" approach out of the window - more so probably only to compete with these social giants.
I think with the arrival of this update it is becoming more apparent the extent of what they (google) consider social is very diverse. Right from the onsite comments to the links from other blogs to the comments on those blogs plus the sharing on social sites. I don't think it is impossible to develop a cypher to understand the tone of the comments and the responses. Not to mention the fact that they have access to google dns, google analytics, toolbar data, search algorithm. I bet even the adsense units are doing more than just displaying ads. The amount of data is just mind boggling.
But still they are just not able to do social - as I mentioned - and this is just a personal observation that almost all the Google properties look different. I went back to orkut after about a year and was perplexed to be honest. Everything had changed and had a different navigational name, different functions and seemingly clever words to describe functions. I left quickly.
The reason why I keep going back to this point is because to me it seems that Google is trying to fix this ONE problem. How to retain users. They are fighting other search engines, social networks and a lot of other things. As you grow large I guess it becomes increasingly difficult to change your point of view and be open to the "NEW" or be standardized throughout your properties. This is one thing they (Google) have done very well with adsense. Users now know that they are ads and are willing to believe (even if unknowingly) that if someone is paying to promote the site - it cannot be all garbage. Those days of spammy adwords are behind us now.
So in all this chaos I think their first reaction is to sort the basic - their search results. If they can't do that - they don't really have a company. So if they are looking at such diverse "social signals" suddenly there is bound to be a major reshuffling of ranking, and that is what I think has happened. The bits and pieces have been put together and now they will try to move to the social approach with +1.
But in my opinion this is too little to compete against facebook - if facebook can do social graphs they can surely do web search or local search with decent accuracy - plus they have this huge advantage of constantly engaged users. This competition is severe and unless they get something good out quickly - they will have a tough time in the future.
And if the facebook search clicks.... it's a lot of trouble. Remember Google search is on android but facebook is everywhere.
We are now trying to focus on our users completely - what seo we have is enough to help us be called a well structured site. We are trying to work on trying to identify and engage our brightest active users and asking them to engage other users. Like Leosghost said, the users will create the brand for us. The more people we engage, the better for us. If we have majority, we cannot be ignored.