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Can you tell me whether Google's algorithm flags plagiarism for using images on your website from other sites? I don't want to get penalized, for cases where the image owner allowed it to be used on my website.

I'd think that it would be hard for Google to know whether the use of the image was sanctioned by the owner, for example if it was done in private, by email for example. Seems to me the algorithm should not penalizing for using images from other sites, as it would need to be telepathic for that.

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The short answer is no, it will not affect your rankings.

Matt Cutts, head of Google's web spam team, says that using stock images on your website doesn't have any negative effect:

Does using stock photos on your page have a negative effect on your rankings? To the best of my knowledge, the answer is no.

It seems pretty obvious to me that this can be generalized to all web images, since as you said, there is no way for a crawler to tell whether a specific use of an image is properly licensed.

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