“And I think that is where the problem lies, there is no competition for Google so they a free to do whatever they want without any consequences to themselves.
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No the problem lies in that they created a structure that was open to dishonest manipulation, and they realised that that dishonest manipulators would eventually kill their business with inappropriate search results, and if they didn't do anything about then they would die.
The so called SEO industry bought this on themselves, Google didn't do it to them they responded to it.
It is rather like credit card fraud before chip and pin, the banks created chip and pin because of the fraudster, becuase if they didn't no one would trust credit cards any more.
Google has tons of competition, it is just they are a long way ahead of most of them. One slip (let too much spam through) and the competition will be down their throats. They know that.