Mobile devices are increasingly becoming the way that many people view web sites, and Google is changing its search algorithm to reflect this fact. As of today, sites that the company's algorithm determines to be unfriendly for mobile browsing will be demoted in Google search results on smartphones. Searches from PCs and tablets won't be affected by the change.
What makes for a mobile-friendly site? Google's blog post on the algorithm change says sites optimized for smartphones should have finger-friendly tap targets, text that's readable without tapping or zooming, and rich content that's playable on mobile devices. Google also says mobile-friendly pages should avoid horizontal scrolling.
For those concerned about their site's readiness, Google has set up a testing page that checks a given URL against its mobile-friendly criteria, and it's posted some resources for developers whose sites don't pass muster. If you have questions, this FAQ provides more information about the new algorithm and its impacts.
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