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They first made these claims a few months back, which I dismissed as their spin on buying Adwords, however they are continuing to make claims about meetings with Google and have even named the Google rep that they are dealing with in the press.
Is this just Spin to benefit their local electorate, or do Google negotiate manual changes to the 'organic' SERPS?
If you go to any conference where a Google representative sits on a site review panel, you can get a taste of this kind of input.
claiming to be negotiating directly with Google
Thats a mighty big claim, I suspect they may be negaotiation, but they will have more luck winning the lottery to be honest. Google is built upon algo driven results, to change that would be online suicide for GOOG.
You may wish to ask your source to clarify the situation. Perhaps that may shed some light on it.
That said, the more that I think about this (and after doing some searches for government bodies), it seems unlikely to me that there would not be a system that allows Google to make manual tweaks to the SERPS.
Consider the many Governmental websites around the world and their often complete lack of SEO. These sites usually rank #1 for their respective searches, yet often commit just about every SEO mistake possible.
It seems unlikely to me that Google would lack the pragmatism to correct certain inadequacies in its algorithm - especially when big Governmental agency's websites are concerned.
yet, by their very nature of being the official government site , they are likely to attract quality inbound links ... which is pretty handy for ranking
Google might not know what the official / non-commercial authority sites are for a region or sub-region, ... coming to think of it, how or why would they? Government sites and networks are a mess, with each election new contractors come, old ones are let go, new systems, domains, CMS, whatever, and it's pretty hard for anyone to keep up with the info.
I'm not saying that your government isn't in some kind of a misunderstanding - not knowing what the talks are about exactly. But if they *were* negotiating, they weren't negotiating 'ranking' or 'inclusion' but the promotion of local important governmental sites to be local TrustRank seed domains.
Needless to say, with even most SEOs not knowing what Google 'Trust' really is ( as the secrecy is what keeps Google virtually safe for the third/fourth year ) I doubt a government official would 'get it'. Perhaps they're not even told properly by Google, so that they wouldn't leak the slightest information to 3rd parties.
Not to mention that secrecy might keep these domains fraud-free as well. I could create an entire site devoted to the TrustRank abuses I see all the time from webmasters sitting in the offices of certain ... eh... okay... and taking advantage of the domains' special parameters by linking out to their own networks abundantly.