I was under the impression that the youtube app was revoked because it displayed videos without the requisite ads. That is, Microsoft was using Google as an unpaid content-hosting service.
Not for lack of trying - Google and Microsoft would on-again off-again "work together" and suddenly the requirements would be different or the result would be insufficient. Most recently, they decided that the Windows Phone app must be an HTML5 application even though it isn't on iOS or Android. Microsoft expressed interest in using the advertising APIs to adhere to Google's requirements, but for whatever reason those were never made available.
The whole Terms of Service for YouTube is very anti open web - everything about it screams distinguishing between privileged and unprivileged user agents. Now, of course neither Google nor any other company is beholden to making their platform work on every platform, but these actions seem deliberate.
For more on this, look into the blocking of Google Maps on Windows Phone, which was based solely on the user agent string sent to Google's servers. Or look into the curious case of IE11 receiving a different search page on the date of Windows 8.1's general availability, making it appear as though the update "broke" Google. Curiously, for weeks before Windows 8.1's general availability people using pre-release versions and MSDN/Technet versions had no problems whatsoever.
It's not clearly deliberate, malicious evil, and I'm perpetually a fan of Hanlon's Razor; but it definitely gives me pause every time I hear another one of the stories of Google's interoperability with Windows and Windows Phone.
I was under the impression that the youtube app was revoked because it displayed videos without the requisite ads. That is, Microsoft was using Google as an unpaid content-hosting service.