That maybe true in some niches, but definitely not all. I have a site in a competitive niche, dominated by government (.gov) authority sites, but rankings have remained the same (3/5 top spots) during the past few weeks.This isn't an 'over optimization' penalty, that's just a clever way to disguise what they are doing. This is a "If you aren't a large authority site get the fuck out" penalty.
Very true.Google NEED amazon, Walmart, Game and Ebay to advertise. We are chicken feed compared to them. If they win every battle for free then Google go bust - it's as simple as that.
Take action and experiment. Everything changes in SEO, but one constant is somebody will always be #1 in the SERPs, the SEO's job is to be that somebody.