Based on my experience, google penalty is "simply" heavily punishments our site for bad behaviors. These punishments are normally:
1) Reduce our page rank lightly: for example we're in top 10 and then come down to top 30 or slightly worst.
2) Not in top 50 or even 100: yeah... this is much worst
3) Remove the page index/rank: this is the heaviest punishment, which means our site cannot rank and cannot appear on google search anymore.
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