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Its no big surprise that Google wants to dominate and is prone to lose a handful of lawsuits. And somehow the small guys(meaning us the webmaster) do have our ways to keep under the radar and still manage to do our thing legally. Nice post btw. Well written.
Since SEO is not illegal, I don't think they can do anything with the normal search results. Google can't just remove all sites doing that. Or can they?
Now that is a good question. the only thing is it is not google removing sites/sponsored links, it is major companies, that don't want other people to benefit by using there slogan/name.
Depending on who you ask, piggybacking could be crossing the line into blackhat techniques. Google is pretty arrogant either way, so this doesn't surprise me.
They won't need to, if a website was ranking and profiting from a brand name in the natural SERP's the brand owner would need to file a suit with the offending websites owner. If the site owner lost, it's up to them to modify their site with the courts ruling to comply and not up to Google to modify the results. It's happened before, action has even been taken against sites using a brand name in the Meta keywords.