If I was Google, I would have been really annoyed too:
Playing a guessing game about some decision with a company that nullified a debt to you by said decision is a bit classless.
Spending time holding the hand of every pissed off squatter/spammer isn't in Google's interest.
As for squatters... AdSense for Domains is probably making Google some good money. I too wished they didn't, but they did.
Adsense for Domains is something advertisers can opt out of.
What if the threshold is at 25 domains, so instead people start opening multiple accounts that run only 24 domains. By telling people what precisely got them booted they can start varying parameters to see what the triggering mechanism is.
And google's contactability for valid issues does still suck, with some exceptions.
Whats the line where Google considers something domain squatting? Lets say its domain squatting if you have less than 5 pages of content, simply create tons of accounts with varying levels of content. What if the signal is "has tons of domains", then run Adsense on tons of domains and see what the threshold is.
(etc etc etc)
The alternative would be what google does. Say nothing and leave no way of protecting oneself.
Look, closing someone's account and taking their money for unspecified "reasons" is wrong, if not illegal. Banks can't do it. Credit card companies can't do it. Any account where you leave money... can't do it.
Maybe this guy was sketchy, but here's how Google has to handle these things:
* stop showing ads
* close the account for all future ads
* give a window of time for him to disburse the money he
already earned for clicks, and if he withdraws in that time, great, otherwise, too bad for him
* close the account permanently
Thomas Fuchs, who wrote Script.aculo.us, had over $2k stolen by Google in this manner. As you can see, http://script.aculo.us/ is clearly not domain squatting nor does it tell people to click. It's a bonafide OSS project used by hundreds of thousands of people.
So why was his money seized? We'll never know, eh?
Google also closed my Checkout account under similar circumstances. Namely, I did nothing wrong. The only reason I got my money back was because my blog post got such incredible traffic that it started a debate on the internal mailing list.
Why was my account closed? Well gee, after I got 60,000 reads, they claimed it was a "technical glitch" -- but I know this to be a lie because a little birdie inside told me what was going on.
Most other people will not be so lucky.
It's called freedom of contract, which is a bedrock principle of law in any country with a thriving economy.
In this particular case this goes under unfair contractual terms, which is the way the law protects the small guy against the big guy who only has one contract and you either accept it or not. It is like a supermarket saying that we will not refund products of a very low quality. Your option is either to not buy anything in any supermarket, cus sure if it was legal they all would want to have that term in their contract, or buy and have no way of recourse.
"And the worst part about this all is that it states in the AdSense Terms of Service (TOS) that Google has the right to suspend any account without prior notification or explanation, and refund all of the earnings in that account to the respective advertisers."
But they're certainly weren't legally obligated to do so.
I've been sympathetic to other complaints about Google cutting off service without explanation. But in this case, in Google's shoes, I'd be struggling to give any response much politer than, "FOAD. If possible, DIAF."