Google Penalty vs. being Blocked and GrayBar

This article was updated on 10-5-08

Google can and does give different types and levels of penalties. This can range from just blocking a site from passing PageRank and or link juice to a more serious (death) penalty of taking the site out of the Google cache and out of the Google index altogether.
Google does not really use the term TrustRank and Matt Cutts has clarified this in the past. Google does however implement this concept of "can a site be trusted" as Google does look at and evaluate the sites you link out to. Who you link to is also important for the SEO concept of co citation of citation theory.

So currently Google can give penalties via automatic filters that look for spam, malware, hidden text links, duplicate content, etc.

Google has a staff of Quality Engineers that review all the submitted SPAM reports and manual penalties can be imposed. Let's look at a specific example of this. Please start at this page:
http://www.w3.org/QA/
This is one of the most powerful sites on the Internet, and a PR9 page. Now look at the outbound links at the bottom of the page.

Now this is where I question some of the subjective decisions Google makes and I also question why they come to the conclusions they do. E.g. how can Google be sure that the PR9 page is not showing paid links? Or maybe the form of payment is not in cash, it could be in other things like free trips or organization sponsorships. I do not think this is happening in this particular case, however how would I or anyone know 100% for sure?

Than Google does give a penalty to Accessify.com, when it is not 100% certain they are selling outbound links. Also if you look at other sites the w3.org PR9 page links to, there are questionable items on some of these pages. So in my opinion this can lead to a "witch hunt", and with Google penalizing so many sites for paid links many webmasters are afraid to give out any links at all. I do not think this is what Google intended by giving out all these penalties, however it is a negative side effect. I also think this is a tough problem for Google because they do not want to penalize innocent webmasters, however I have seen several cases of Google incorrectly and unfairly penalizing some web sites.

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If you want to read more about if you should buy text links and what the risks are and what the "safe ways" are to perform Google approved link building please read this article:
http://www.htpcompany.com/google-pagerank-buy-sell-ads.htm

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The way w3.org gives the outbound links is fine with Google and please notice that all of the pages this site links to are PR8 pages except one of them.
http://www.accessify.com/ which is a PR5 page because of outbound links at the bottom of the page Google does not like. So this is a case of a manual penalty being imposed by Google and the accessify site should really be a PR8 and Google has reduced it to a PR5 to discourage future text link sales and penalize the site. Generally when Google does this it also blocks any link power or juice to be passed by accessify and the sites it links out to. This case is also interesting because it shows it takes time for PageRank penalties to propagate though the Internet. E.g. every page that accessify links out to is currently a PR6. I suspect that after the next PR update these will all drop.

Google has had a very long history of blocking sites from passing PageRank and link juice (Link Juice = PageRank + any other factors Google uses to value links).
Another example we can look at is: web-stat.com which should be a PR8 and Google has penalized them to a PR5. This is an interesting case, because this counter site and almost all counter sites have been blocked from passing PageRank for a long time. Recently Google dropped their PR and all the advertisers are now gone. However Google has still kept the web-stat.com site at PR5. Generally Google will keep this penalty on a site until the site requests the penalty be removed and promises Google in writing that they will never do what caused the penalty again. One more example is seroundtable.com that should be a PR7 and Google has reduced seroundtable.com to a PR4, for selling paid "Sponsored Links".

Still adding more to this article. Please check back soon.

Regarding the Google toolbar and what the graybar means. In the past the graybar was the kiss of death. The worst and most serious penality you could receive from Google, even worse than PR0.
Today is not true that graybar (greybar - British spelling) is the worst penalty, any new page one creates even this page shows up as a grey bar on the Google Toolbar at first.