> The decision to demonetize is Google's.

Yes, but the decision is based on feedback from advertisers. In YouTube's ideal world, every single video on the site would be monetized, but this isn't possible because advertisers do not want their brand associated with controversial topics, especially those that concern very heated political debates.

> Wouldn't a free market allow everyone to be in the mix, but advertisers would make the choice?

The creators and advertisers have no obligation to work through YouTube. In fact, all of the big creators work directly with advertisers that are friendly to their content by editing sponsored content directly into the video.

I don't believe there is enough evidence available to state what Google is making its decisions based on. I think its somewhat safe to assume the first major round of demonitization (the original adpocolypse) was likely based on advertiser feedback, since the major complaints being made involved extremely inappropriate ad placement/tone for the videos they were being played on.

The more recent demonitizations have appeared more and more "proactive" in protecting Google, but due to the comments being made by the CEO of youtube, and by the patterns in the demonitizations its not unreasonable to suspect there maybe other factors outside of keeping advertisers happy.

Perhaps, but as I already noted, every popular video that is demonetized costs YouTube a lot of money because they stream the video to millions of viewers but get no revenue to offset the costs of hosting and streaming. We all know the most important thing to every corporation, including YouTube, is to make as much money as possible, so barring some strong evidence to suggest otherwise, we need no other explanation than the obvious one: advertisers don't want to pay for ads in controversial videos.

Advertisers pay Google for the service of making sure their ads are next to content that maximizes sales and minimizes controversy. Whether or not Google achieves that is up for debate.

Advertisers can/do choose to bypass Google and just straight sponsor videos.