Is nofollow devaluing the Google algo? Do Google account for quality factors from nofollow inbound links?

Matt's answer:

CUTTS: Let’s talk a little bit about nofollow. Here’s a few questions we got. Vince Samios from the UK asks, “Do you feel that all the widespread and blanket use of nofollow tags is devaluing Google’s search algorithms?” So, let me just interject before I finish the question. Even though SCOs may feel like nofollow is everywhere on the Web, if you look at the percentage of links that have nofollow, it’s actually a pretty miniscule percentage. So, nofollows aren’t that common on the Web compared to how the perception of them might be. So let me finish the question now. “Examples such as Wikipedia, where ALL external links are nofollow. Does Wikipedia mean nothing to Google’s algorithms?” And then jonaths from Brighton, UK asks, “Do Google take into account quality factors from nofollowed links when the links come from well established authority websites, such as Wikipedia?” So, we’re trusting, we’re not taking into account the links from Wikipedia because they are nofollowed. So if you–don’t bother to go spamming Wikipedia, it’s not going to make any difference in search engine rankings if you get a link because that will be nofollowed. If you have a great resource and people find it via Wikipedia and it’s just fantastic and people link to that because of that or you’re getting traffic from a link in terms of direct surfers or visitors, then that might benefit your site but it’s not going to get any search engine ranking boost just because Wikipedia links to you with those nofollow links. Now let me take a one slight detour and mention that if a particular site does have trust in the person who’s making the link then there’s plenty of good reasons to make that link flow page rank and take nofollow off. So for example, Wikipedia has experimented with all kinds of different ways to improve their process, you know, maybe anonymous edits have to be approved before they go live. So you could certainly imagine a scenario in which a Wikipedia editor who’s very trusted, who had made a ton of edits without them ever being reverted, you know, that other editors vouched for, however, they wanted to define trust, those links might, for example take the nofollow off. So a very simple thing when you’re being under attack from spammers is to add that nofollow tag and then it doesn’t benefit the spammers anymore. But if you’re on a blog or a forum or Wikipedia or whatever and you can come up with a good metric to say, “Okay, these are links that we do trust, that we do think are editorially given and are valuable for users,” then there’s plenty of good reasons to go ahead and say, “Okay, make those links flow page rank.” But in general, nofollow links are a relatively small percentage of the Web and it does prevent a lot of sites from getting spammed. We don’t use those links from Wikipedia currently but if Wikipedia wanted to put a more nuance policy in place, I would definitely support that.

by Matt Cutts - Google's Head of Search Quality Team

Original video: