Does Google PENALIZE affiliate links vs no follow?

[Leo Martinez]

My 4 yr old site got de-indexed today HELP - Webmaster Central Help

Linking To Affiliates? Better Nofollow Those Links or Google Will Penalize You

A Google Webmaster Help thread has one webmaster who runs a home construction resource complaining that his rankings tanked. After some back and forth, Googler, JohnMu came in and said:

I browsed your site's reviews a bit and most of the links are either affiliate links or links to the companies without nofollow. This doesn't seem to match your reply regarding the use of nofollow. Perhaps it would be good to double-check and submit a reconsideration request should you find something that could be improved.
Yes, this webmaster dared to write a review or an article and decided to link to related products within the article, via a straight link, to the affiliate. Google likely automatically found the links, felt the site was abusing their paid link policy and slapped them with a penalty for it.

So, if you have affiliate links that you have not nofollowed, you better nofollow them. If you don't, well, then you join the ranks of sites like the one in the thread or like this site. Yes - before you all comment that we don't nofollow our paid links, I admit it, we don't. I am one of the few bloggers who decided that this blog's sponsors are not just "advertisers" but also extremely related to the site's content and can be useful to ALL of our readers. Hence, I decided to take a hit on this site's PageRank and ranking - to stand tall. Don't get me wrong, I believe this was a smart move by Google, and I totally feel they have every right to do this. Doesn't mean I don't have a choice to take a hit in the Google rankings for it.

Forum discussion at Google Webmaster Help.

[DavidJohnny]

Wow, that's harsh. Google has way too much power! THis guy has a great site, with a thousand pages of unique content, and they delisted him because his aff links aren't nofollow.

I see he's back listed now.

Time to go change all my links.

[4morereferrals]

Wow that was pretty brutal

[Preciseim]

That is seriously harsh...Although it does go to show, that you can't be over-reliant on Google. The have the power to drop us at will and there is nothing we can do about it.

[warrich]

Time to time be updated webmasters guide line for new tos else you will be penalised, coz there policy can be changed any time

[InternetMarketingIQ]

Nice of Google to take a Shotgun approach to everything. Google is some how against everything that doesn't directly make them money. They want all the advertisers on board with there own programs. Kind of flies in the Face of Net Neutrality.

Google is actually the ultimate scraper site. The profit from everyone else. This is why I no longer care - ethical or not - when programmers figure out how to game their rankings.

[Catalyst eMarketing]

I was reading about this today too, with dismay.

The link from the quoted part of post #1 came from Search Engine Roundtable.
Linking To Affiliates? Better Nofollow Those Links or Google Will Penalize You

The quote from the "Google guy" though isn't really very clear or conclusive, I don't think.
He said this part:

I browsed your site's reviews a bit and most of the links are either affiliate links or links to the companies without nofollow. This doesn't seem to match your reply regarding the use of nofollow. Perhaps it would be good to double-check and submit a reconsideration request should you find something that could be improved.

[ge]

Now you'd think they'd equally penalize their own Adsense links but I sense a double standard.