I agree 110% and not because Google penalizes new domains, but because Google will go to extreme and unfair measures to protect their (soon to be) monopoly in the paid advertising market.
Google whacks paid links because it competes with AdWords. Doesn't get much more complex than that. If you own a company that makes it's money by selling links or providing webmaster an alternative to AdSense/AdWords, prepare to be attacked directly by the Goog.
The MS-like backlash will happen with Google, just give it time.
Google should whack paid links, they're less relevant than natural links; this is a good thing and makes the search results more relevant. Selling links is gaming the system. Paid links spoil the relevance of search results.
Selling links only spoils relevance because that's what Google bases their rank algorithm on. This is a flaw in Google's logic. Google created the market (both the good side and the bad), and now they want to control it too. Without Google's ranking math there would still be paid links. It shouldn't be 'our' problem that Google's logic if flawed, they should engineer a new solution.
If we take your and Google's word on this, that paid links ruin relevance, it just displaces where the money and time is spent. If direct paid links are penalized, it shifts the power and influence to other parties/locations (and all the paid link money directly into Google's pockets)
Do you remember before Google? Do you remember how bad search engines sucked and how irrelevant the results were? Google was smart enough to see that when lot's of pages link to a site, that site must be considered relevant by a lot of people.
Ranking results by inbound links was the breakthrough that made search actually work. Paid links are bad, they allow people with money to game the system and make irrelevant content show up in the search results. Unless you're a spammer or an SEO, Google is doing the right thing for the user. It is the user after all, they're trying to serve, not middle men trying to arbitrage the system. Ideally, they figure out a way to make spamming and SEO completely irrelevant, that industry needs to die.
You act as if you have some right to show up in their search results, guess what, YOU DON'T. It is Google's search engine, they have every right to do with it as they please, including exclude anyone they wish.
Google's logic isn't flawed, yours is. Google's search results are not a free market, they have every right to game their own system to make them money and there's nothing unfair about it. You have no rights and no expectation of rights about how they index your site with their search engine.
Google whacks paid links because it competes with AdWords. Doesn't get much more complex than that. If you own a company that makes it's money by selling links or providing webmaster an alternative to AdSense/AdWords, prepare to be attacked directly by the Goog.
The MS-like backlash will happen with Google, just give it time.