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Google’s Spam Search Division has announced that Google no longer operates the 100-links-per-page Webmaster guideline.
The guideline was actually dropped before 2008. However, SEOs and webmasters are apparently under the impression that having over a hundred links on their pages would effectively lead to a penalty from Google.
Originally, this was because Google used to index only 100 kilobytes of a page. In accordance with this limit, they assumed that 100 links would fit. If there were more than 100 links, there would be a chance that the page would be too long: Google would then shorten the page, instead of indexing the entire page.
This is no longer true. There are many sites that have hundreds, if not thousands of links on their homepages, doing so without incurring penalties from Google.
It looks like Google is taking a case-by-case approach with penalising particularly spammy sites. If a site isn’t legitimate and contains thousands of links, Google reserves the right to take action.
While making the announcement, Google added that a site’s PageRank is divided by the number of links on a page.