Nick Wilson has an excellent podcast on the topic, in which he observes that Google is perversely incented NOT to clear up spam in its search results because it actually makes money off of those spam sites by supplying the ads.
Nick also sides with the argument, which I’ve heard many times, that these auto-generated crap pages filled with ads are not spam IF the ads on those pages bring you somewhere useful relative to your search. There I disagree. The ends do not justify the means. I do NOT appreciate being a pawn in that game. I want to search, get good results, and go DIRECTLY to them.
But here’s the big question. Google clearly profits from spam. The question is how much? If they cancelled the AdSense account of every spammer, would their earnings take a sufficient hit that their stock would plunge?