Why does Google like domain names so much?

I work with a lot of pretty major web sites and people who are pretty serious about SEO. One of the frequent complaints that I hear, however, is that Google gives a massive amount of page rank to sites that have a given keyword in their domain names.

This seems to be like ordering a phone book by whether the store has an address on Michigan Ave or 5th Ave rather than based on what they actually sell or what service they provide. It also seems to be a particularly odd practice for such bright folks since, when you think about it, it’s very rare for the top site in an industry to have a domain name with a keyword in it. For example:

eBay.com (don’t see “auctions” in there)
Yahoo.com (don’t see “portal” in there)
CNN.com (nope, it hasn’t got “news” in the title)
Expedia.com / Orbitz.com (no mention of “travel” there)
Amazon.com (don’t see “books” in there, but I’m sure it ranks well for rivers)
YouTube.com (no “home videos”)
FaceBook.com (do you really use it for faces? or books?)
MySpace.com (you decide – social network or NASA-killer?)
Flickr.com (I still have trouble spelling that one, but right or wrong it doesn’t say “pictures”)
Wikipedia (wiki-what?)
Google.com (Interesting…doesn’t say “search”, “advertising” or anything related. Go figure.)

In fact, when you generalize to the top 20 sites in the US according to Alexa, only the 3 associated with Microsoft have domains that have anything to do with their content.

I love Google and use it for searching, but I do wish they’d lighten the load with respect to domain names. It would also discourage so much hassle with people charging ridiculous amounts for domains on the secondary market and/or arbitraging them into banner pages and creating friction for sites trying to provide real content and services.

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