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Notes -
More to the point, I'd say that at some point the ability of SEO providers to game the algorithm just outpaced Google's ability to respond so much that they threw their hands up in the air and rely on their practical monopoly status and the presumption the potential competitors would just be affected by the same SEO trickmastery as themselves.
I've got colleagues who provide SEO services and yeah, basically they seemingly can create plans to deal with Google's algo changes before they even roll out. Google simply cannot respond quickly because changing their algo on their end is a really big deal whilst changing the SEO optimization of client webpages is trivial, so it's like an Elephant trying to swat mosquitos. And Google has enough tasty blood that it can afford to let a few thousand mosquitos drink and not notice the loss.
And I think Google creating a new form of valuable 'real estate' (positioning on Google Search results) has allowed SEO firms to make a ton of money in a very self-sustaining way. If your company doesn't use SEO services, you'll lose out on business to those that are using them, and vice versa.
Any change Google makes to try to beat current SEO methods will simply create new ones, and the SEO firms will be much quicker to respond with new methods, which propagate immediately.
I strongly suspect Google COULD come up with a solution that would outflank the SEO companies for a while, but there's just no pressure to do so and it would probably be costly.
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