dailypress, thanks for that article. I've seen somewhat similar "incestuous" linking in niches where the parent company owned four or five or six key sites... but they never focused links on partner sites to such a degree. The general pattern was an exchange of footer links... which I should say was done essentialy with Google's blessing, as Matt C had said several times it's a natural thing to do. The sites seemed to link to each other with company name anchor text, avoiding keywords, and that was about it.
In one instance, a client was a Fortune 500 company which owned a great many subsidiaries, and my tendency was to pull back and not overdo the obvious nepotism, at least among sites the were essentially the same except for the slogans on the bottles. That said, I tried to push them into developing a number of interest-based consumer sites, to serve identifiable groups of consumers who used their products differently... but I could never get the parent companies to move on it. The clients felt that there was no point to it... that the market was essentially pre-divided, and the web wasn't going to get many people to switch their brand of, say, soap. In retrospect, I think these were companies and agencies who didn't want to work very hard.
Where I had clients with partner sites that were too similar... shared common hosting and backlink sources... I called them "sister" sites. Those were often close enough in terms of inbound link sources and hosting that Google only wanted to rank one of the sisters at a time. The site rankings were like a see-saw for a while... when one went up the other went down.
All of which to say that my reservations about making the alliances too obvious are the same as yours, and it could be that the problems might be in separating the brands.
It could also be that if you're high enough up there, you couldn't do too much wrong if you didn't t get too spammy. You needed to avoid interlinking with keyword links. I truly don't think its corporate favoritism on Google's part. I think it's more that these subsidiaries have large followings in themselves, so they're not depending on interlinking for basic level ranking or link juice, though it undoubtedly helps.
This is not too different from how brick and mortar companies are organized. It initially came as a surprise to me, when I did TV commercials, that several clothing chains, targeting different demographics, were all operating out of the same advertising office. In retrospect, it made a lot of sense.
I like the introduction to the article, which ties what's on supermarket shelves to just 16 dominant companies. The capitalization of these companies, though, is large enough that it's really hard to push them out of the way by trying to bring in a new independent competitor. True in brick-and-mortarville, and true on the web.
