UK SEO Dave Naylor says his clients are being impacted by a Google algorithm to penalize buyers and sellers of paid links. In a post on his blog, Been Hit in the last 14days by Google Paidlinks Roll out?, Naylor says that the changes seem to be targeting sites with links in footers or sidebars, as well as off-topic links and link networks.
Naylor suggests webmasters "weather the storm," and see how this algorithm evens out: "So what can you do? OK I still think wait it out, but download your backlinks and check though them if you can. Clean them up do so and go get some authority!"
Google has not said that it has implemented a new algorithm, but Matt Cutts, head of Google's Webspam team, has been asking for spam reports related to link buying and selling, as a way to test a new algorithm being developed that would find such instances.
UPDATE: As expected, Google is being tight-lipped about the existence or non-existence of the algorithm. According to a Google spokesperson, "We're adding and updating algorithms on a regular basis, but our Webmaster Guidelines have remained unchanged and consistent. In order to help maintain a more level playing field, we discourage webmasters from buying or selling links with a focus on passing PageRank."