Should I report a competitor using "black hat" SEO techniques?

Great question because it really is a dilemma: do you possibly create an enemy by reporting search engine spamming / black hat SEO of this nature, or do you let it slide, assuming that Google will eventually recognize the sneaky trick and penalize the other site?

Let's ask Google to see their explanation:

"We work hard to return the most relevant results for every search we conduct. To that end, we encourage site managers to make their content straightforward and easily understood by users and search engines alike. Unfortunately, not all websites have users' best interests at heart. Trying to deceive (spam) our web crawler by means of hidden text, deceptive cloaking or doorway pages compromises the quality of our results and degrades the search experience for everyone.

"We think that's a bad thing, and so we request that, if your Google search returns a result that you suspect is spam, you please let us know by using this form. We thoroughly investigate every report of deceptive practices and take appropriate action when we uncover genuine abuse. In especially egregious cases, we will remove spammers from our index immediately, so they don't show up in search results at all. At a minimum we'll use the data from each spam report to improve our site ranking and filtering algorithms, which, over time, should increase the quality of our results."

So there you have it. Pragmatically should you report the search engine spam? I would suggest that you do report it, personally. If they're doing something wrong, they deserve to get into trouble with the search engine, and if they're costing you revenue because of their sneaky trick, well, they're also costing other competitors revenue too, aren't they? I am all for competition, and even savvy, ingenious competitive approaches, but cheating is just that, and it's never okay.

Now, I should mention that some people believe that Google automatically checks the reporting party's site too, to ensure that they're not in the middle of a "rat 'em out" fight, but I have no reason to believe that this is true and besides, you're clean anyway, aren't you? :-)

Hope that helps you resolve your dilemma.