At least I think that's what Steve is saying. Please clarify.
As splogs destroy the perception of page rank legitimacy, which is based not on the actual metrics of linking but the accrued reputational value of a site's authority, the number of false positives will undermine confidence and dilute the economics of the system. It's not so much that links are dead, Doc, as that trust in link rank is undermined. As in the bond market, weakened trust lowers ratings and shifts the market in other directions. This is Microsoft's opportunity