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Every visitor to your web site must first establish a connection with an ip address. These ip addresses resolve to dns servers which in turn identify the origin of that visitor. Every search engine crawler must identify itself with a unique signature viewable by reverse dns lookup. This means we have a sure fire method for identifying and cloaking based on ip address. This also means that we don't rely on the user agent at all, so there is no way to circumvent ip based cloaking (although some caution must be taken as we will discuss). The most difficult part of ip cloaking is compiling a list of known search engine ip's. Luckily software like Blog Cloaker and SSEC already do this for us. Once we have that information, we can then show different pages to different users based on the ip they visit our page with. For example, I can show a search engine bot a keyword targeted page full of key phrases related to what I want to rank for. When a human visits that same page I can show an ad, or an affiliate product so I can make some money. See the power and potential here?
So how can we detect ip cloaking? Every major search engine maintains a cache of the pages it indexes. This cache is going to contain the page as the search engine bot saw it at indexing time. This means your competition can view your cloaked page by clicking on the cache in the SERPS. That's ok, it's easy to get around that. The use of the meta tag noarchive in your pages forces the search engines to show no cached copy of your page in the search results, so you avoid snooping web masters. The only other method of detection involves ip spoofing, but that is a very difficult and time consuming thing to pull of. Basically you configure a computer to act as if it is using one of Google's ip's when it visits a page. This would allow you to connect as though you were a search engine bot, but the problem here is that the data for the page would be sent to the ip you are spoofing which isn't on your computer, so you are still out of luck.