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[edited by: tedster at 2:18 pm (utc) on Nov 1, 2010]
They do look at those reports. If we all spent more time reporting spam instead of posting complaints about it here I bet the SERPS would improve. Who better to spot the spammers than us webmasters who know te tricks? I think we should all be more proactive since many of us make a living off search engines.
I think of G as a business partner. Not an enemy.
Some people may say their bounce rate is increasing because Google is sending them better targeted traffic
Google want to control your products and services and really aren't interested if your business goes down the pan. Think Google news,think google maps, think google products, think google places , think google images, think google real estate, do you really think they care about your websites appearing at the top of their results?
I think google is raising up the poor quality sites so webmasters can report them to google. I dont think its a coincidence that this all happens shortly after google releases the report spam chrome plugin. I think google is essentially forcing webmasters to report their competition by saying "these crappy competitors will outrank you for your SERP's unless you do something about it"