A lot of discussions has been going on at the official Google thread where a very interesting response from Matt Cutts of Google was noticed, where he tried to explain about a bug in Google's algorithm for detecting, that is what is believed to be, a kind of spam due to an IFrame.
The site concerned here is atlasshrugs.com and Matt Cutts said:
Hi, we looked into this, and the blog in question was ranking lower in our search results because of an algorithmic error that has now been fixed; the site's drop in our search results had nothing to do with the views expressed on the site. Essentially, our search algorithm saw a large area on the blog that was due to an IFRAME included from another site and that looked spammy to our automatic classifier. I believe that this bug has been fixed now. We also added additional safety checks to the relevant system that would escalate to an engineer if this site had the same issue in the future.
The site should be ranking higher in Google within 24 hours according to the people that I talked to. Thanks for mentioning the site on this discussion group to give us feedback–I appreciate it.
Usually it has been noticed that it is very rare to find Matt in various discussions like Google Groups thread and reply, so when this news was published, it was hard to ignore it.
Matt explained later on, "we adjusted the algorithm in question to make more robust, so the change also benefits any other sites there were affected." Thanks to Barry for noticing it!
For more details, check out the Google Groups thread.