Paid Link Reports in Google

There has been much speculation about what happens to paid link reports that are filed in the Google Webmaster Tools. Eric Enge of StoneTemple just interviewd Maile Ohye, Tech Solutions Engineer from Google who worked on Webmaster Tools. I think this is pretty clear:

Eric Enge: Right, so then next question for paid links that get reported in Webmaster Tools. I think it’s fairly well stated that the primary thing you do with it is use it to improve your algorithms. But, if you do confirm a link is a paid link when you get the report, is it normally disabled from passing PageRank?

Maile Ohye: Yes, we do disable such links from passing PageRank.

and a bonus tidbit from the interview, with Google now indexing some Flash text:

Eric Enge: So, will a link embedded in Flash pass PageRank?

Maile Ohye: Yes, it functions as a regular link.