Google & Bing Have Whitelists – “Exception Lists”

Google has long maintained that "the algorithm" is what controls rankings, except for sites which are manually demoted for spamming, getting hacked, delivering spyware, and so on.
At the SMX conference it was revealed that Google uses white listing:

Google and Bing admitted publicly to having ‘exception lists’ for sites that were hit by algorithms that should not have been hit. Matt Cutts explained that there is no global whitelist but for some algorithms that have a negative impact on a site in Google’s search results, Google may make an exception for individual sites.

The idea that "sites rank where they deserve, with the exception of spammers" has long been pushed to help indemnify Google from potential anti-competitive behavior. Google's marketing has further leveraged the phrase "unique democratic nature of the web" to highlight how PageRank originally worked.

But why don't we conduct a thought experiment for the purpose of thinking through the differences between how Google behaves and how Google doesn't want to be perceived as behaving.

Let's cover the negative view first. The negative view is that either Google has a competing product or a Google engineer dislikes you and goes out of his way to torch your stuff simply because you are you and he dislikes you & is holding onto a grudge. Given Google's current monopoly-level marketshare in most countries, such would be seen as unacceptable if Google was just picking winners and losers based on their business interests.

The positive view is that "the algorithm handles almost everything, except some edge cases of spam." Let's break down that positive view a bit.

• Off the start, consider that Google engineers write the algorithms with set goals and objectives in mind.
  
  • Google only launched universal search after Google bought Youtube. Coincidence? Not likely. If Google had rolled out universal search before buying Youtube then they likely would have increased the price of Youtube by 30% to 50%.
  • Likewise, Google trains some of their algorithms with human raters. Google seeds certain questions & desired goals in the minds of raters & then uses their input to help craft an algorithm that matches their goals. (This is like me telling you I can't say the number 3, but I can ask you to add 1 and 2 then repeat whatever you say :D) 
• At some point Google rolls out a brand-filter (or other arbitrary algorithm) which allows certain favored sites to rank based on criteria that other sites simply can not match. It allows some sites to rank with junk doorway pages while demoting other websites. 
• To try to compete with that, some sites are forced to either live in obscurity & consistently shed marketshare in their market, or be aggressive and operate outside the guidelines (at least in spirit, if not in a technical basis).
• If the site operates outside the guidelines there is potential that they can go unpenalized, get a short-term slap on the wrist, or get a long-term hand issued penalty that can literally last for up to 3 years!
• Now here is where it gets interesting...
  • Google can roll out an automated algorithm that is overly punitive and has a significant number of false positives.
  • Then Google can follow up by allowing nepotistic businesses & those that fit certain criteria to quickly rank again via whitelisting.
  • Sites which might be doing the same things as the whitelisted sites might be crushed for doing the exact same thing & upon review get a cold shoulder.

You can see that even though it is claimed "TheAlgorithm" handles almost everything, they can easily interject their personal biases to decide who ranks and who does not. "TheAlgorithm" is first and foremost a legal shield. Beyond that it is a marketing tool. Relevancy is likely third in line in terms of importance (how else could one explain the content farm issue getting so out of hand for so many years before Google did something about it).