The Search Engine Blog

Will Google be treating subdomains as folders? Currently you can have multiple subdomains treated as separate sites. If the new rules go into effect, Google will treat subdomains as if they were merely subfolders off your main site and limit results to only two entries per domain. There will be obvious exceptions of course, but this will mean some changes in strategy for many marketers.
If your subdomains are truly featuring unique content and you are using them properly, this shouldn’t be too much of a concern. If you are using subdomains to rule the search results for a particular phrase, you are affected. It sounds good in practice and it is in response to those trying to break the rules. After all, how many listings do you need to get people to go to your site? If you have to rule the world just to get people to visit your site, maybe your site isn’t that great?

Treatment of a Subdomain Compared to a Domain