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Matt Cutts: Great question. Whenever rel canonical was first introduced we wanted to be a little careful. We didn’t want to open it up for potential abuse so you could only use rel canonical within one domain. The only exception to that was you could do between IP addresses and domains.

But over time we didn’t see people abusing it a lot and if you think about it, if some evil malicious hacker has hacked your website and he’s going to do something to you he’s probably going to put some malware on the page or do a 301 redirect. He’s probably not patient enough to add a rel canonical and then wait for it to be re-crawled and re-indexed and all that sort of stuff.

So we sort of saw that there didn’t seem to be a lot of abuse. Most webmasters use rel canonical in really smart ways. We didn’t see a lot of people accidentally shooting themselves in the foot, which is something we do have to worry about and so a little while after rel canonical was introduced we added the ability to do cross domain rel canonical.

It basically works essentially like a 301 redirect. If you can do a 301 redirect that is still preferred because every search engine knows how to handle those and new search engines will know how to process 301s and permanent redirects.

But we do take a rel canonical and if it’s on one domain and points to another domain we will typically honor that. We always reserve the right to sort of hold back if we think that the webmaster is doing something wrong or making a mistake but in general we will almost always abide by that.

Hope that helps.