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I work with a very good online marketer who runs an agency between New Zealand and the UK at my co-working space. With their UK clients they saw a lot of flagging over a year ago so adjusted their practices and moved on, this hasn't happened much in NZ yet. He predicts a massive amount of bloodletting here in NZ as google are only just starting to pay attention and flag sites for doing dodgy link building and, apparently, that's what most local SEO's here do.

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Are you saying that Google applies these algorithms differently in different geographical locations?

Google has confirmed on multiple occasions that this is the case. Different languages and geo-graphic regions require tweaks I am sure. US English != UK English.

See - http://googlewebmastercentral.blogspot.com/2011/04/high-qual...

For an example of Google announcing that the Panda update was now launching globally (as opposed to the US the prior month)

also UK sometimes is a test market, why? (nearly) the same language as in the US, but not as a dominant market as the US. (the same reason why we german natives test new websites with switzerland)

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