Large IP holders are happy to use it because it heavily favors them. Large IP holders also don't have to worry about repercussions for false or incorrect DMCA claims.

It became obvious to big copyright owners that they would get more if they played ball with Google instead of fighting them in court.

From Wikipedia[0]: § 512(c) also requires that the OSP: 1) not receive a financial benefit directly attributable to the infringing activity, 2) not be aware of the presence of infringing material or know any facts or circumstances that would make infringing material apparent, and 3) upon receiving notice from copyright owners or their agents, act expeditiously to remove the purported infringing material.

This is an 'and' which I take to mean safe harbour takedown (the 3rd clause) only applies if the other two are also true. So the host must not know it exists (plausible for YouTube) and not receive a direct financial benefit (does Ad revenue count?).

[0]: https://en.wikipedia.org/wiki/Online_Copyright_Infringement_...