I think we need to make an important distinction between the ability for one or two bad links to cause rankings to drop and the ability for Google to give a penalty based on systematic violation of their guidelines by building lots of unnatural links.
There are hundreds of examples recently of sites that have lost their rankings purely due to unnatural links pointing to their domain. There is no doubt at all in my mind that Google is penalising sites for building unnatural links.
The loss of rankings is severe and often results in the landing page that has the unnatural links pointing at it ranking lower than other less relevant pages from the same domain. This proves to me that the loss of rankings is a penalty rather than link devaluation.
Can I build links to my competitors and hurt them?
Consider the following two scenarios:
A site ranks number 1 for lots of keywords and a competitor starts trying to knock it down by building thousands of spammy links.
A site without enough link equity to rank is stuck on page 2 for their major keywords. For instance, they hire an SEO agency who spends 6 months building thousands of links for their call recorder free product and they move up to the top of the rankings.
There is a huge difference between the scenarios above and Google will very easily be able to see whether the links came before the site was ranking or after it was ranking.
If the links were built before the site was ranking then it simply can’t be competitor sabotage – who in their right mind would want to sabotage a competitor who ranks outside the top 5 results by building them up to number 1 and then waiting months for Google to give them a penalty. It just wouldn’t happen.
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