For years, Google stood by the stance that there was little competitors could do to a website to negatively affect its search engine rankings. As natural links became more valuable and paid links were devalued or penalized, Google changed their stance slightly on the issue, but still maintained it wasn't a widespread issue, with Google's Matt Cutts admitting negative SEO isn't impossible, but it is difficult.
Then came the link disavow tool, which allows webmasters to disallow paid or low quality links and clean up their backlink profile, regardless of whether they or a competitor was responsible for pointing those backlinks at a website.
I guess everyone already knew that.
This disavow link thing is crazy stuff too. There are a lot of people freaking out and disavowing sites because they don't know whether or not google finds the link to be low quality. The people affected the most are the small businesses that don't have the resources to separate the hype from the facts.
Check this link as well: https://news.ycombinator.com/item?id=5813306
This is what someone had to add:
"Somewhat of a sidebar, but what's to prevent the following:
1) You buy 1000 links for $5 
2) You enjoy a brief rise in the rankings
3) Google catches on and penalizes you
4) You use the link disavow tool to effectively say, "We didn't do it! A competitor did it to us!""
Negative SEO surely exists! - All Websites are subject to attack when they are too young.
The disavow tool helps but it is not a one-stop solution to negative SEO.
This why Disavow thing was created and I believe it is best for those who want to do Good with their site and believe me that $5 thing wont work as if someone try to do it over and over again then his disavow file will be rejected.
Yes, Negative Seo is exist. Negative SEO is defined as when anybody does something malicious to your website in an effort to reduce your website’s rankings in the search engines.
There are some signs of negative seo -
a) Unexpected drop in traffic
b) Considerably more low quality links
There are a lot of people freaking out and disallowing sites because they don't know whether or not google finds the link to be low quality.
I happened once to me withan idiot who made links to one of my sites.
The problem was that the links were coming from a site ... with women.
You can imagine the face I made when I discovered that links "GOOD" had.
I have one of these attacks on going on one of my sites at the moment. 10,000+ links a day aimed at it since the 11th October - no sign of stopping. Rankings for the keywords the spam links seem to be using as anchor text plumeted on Tuesday (5 days after the attack started) very specifically just the keywords the attack was targeting. I have a large site that ranks for maybe 500 decent keywords, just this subset of 7 went - the exact same 7 all these links have as anchor text.
Negative SEO works, since Penguiin 2.1 Google has developed a hair trigger reaction and that encourages the huge torrents of spam to be created that we are seeing now.
Don't use Disavow tools, why because of how do you know the bad & good links exactly.
If you use disavow tool Google will check and give extension for some days then after your again penalized by Google with manual action.
Low quality links are not consider by Google than whats use of this ..
Negative SEO does exist and it is very effective. Sadly, the disavow tool does not prevent any possible damage. Based on many cases we had in hands, the disavow tool was rendered as useless. Once a site gets flagged, it won't ever be the same as a site that never got penalized or flagged. On the other hand, it is good to point out as well that in some cases, the tool can recover partially the damage caused by a black-hat negative SEO campaign.
I have a friend that was hit hard by the latest Google update, and his SEO was based mostly on building a large amount of what you may call "low quality links". So, yeah I guess that negative SEO is real
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