Until recently, Google’s definition of a widget link scheme was pretty broad. However, Google has gotten a lot more specific in an update to its Link Schemes page to clarify what types of links in widgets violate its webmaster guidelines.
As Search Engine Roundtable reported, widget link schemes used to be defined by Google as:
Links embedded in widgets that are distributed across various sites, for example:
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Now, Google defines a widget link scheme as:
Keyword-rich, hidden or low-quality links embedded in widgets that are distributed across various sites...
The example Google used remains unchanged.
It seems that Google’s update to its link schemes description was simply done to eliminate potential for confusion and leave a bit less room for personal interpretation.
Furthermore, while the old definition implies that any link in a widget is a scheme, the new definition doesn’t explicitly state this. Instead, it provides some factors that will cause Google to view a widget link as spam.
Google's Matt Cutts recently warned against widgets as a winning link building strategy, also suggesting when it's proper to use rel=nofollow for them.
"I would not rely on widgets ... as your primary source to gather links, and I would recommend putting a nofollow, especially with widgets," Cutts said.