a) Google doesn't pay for bandwidth. They have peering agreements because of all the dark fiber they bought (https://www.lightreading.com/optical/dwdm/google-dark-fiber-...)

This isn't exclusive to Google though - most large bandwidth users have peering agreements.

b) Google does have edge caches[1]. It's true that the long tail of YouTube videos is longer than Netflix, but since Google doesn't pay for traffic (see (a)) this only affects speed, not cost.

[1] https://peering.google.com/#/infrastructure