In an iterated game, punishments must have a deterrent effect. They might seem disproportional, but Google's goal is not "do what's best for the world in this one instance, ignoring the long-term effects". Google's goal is "make sure nobody will try to cheat Google's algorithms, now or in the future." This is how you build the best search engine in the long run.
It would be the same if Google didn't dominate search, though they'd have to be more careful about optimally calibrating the punishment.
(N.B. This argument remains true even if other people are gaming Google right now.)