Keep in mind that without the Ad business, most of Google's products cannot exist. Search gets paid by Ads, same with YouTube. Most of the free product are just Ad delivery platforms, and they are all pretty much on the verge of losing money as-is. The Ad business itself has margin enough to cover that, and without a set of outlets like those services, it wouldn't be able to exist.

Vimeo has tried a different approach, but it's hardly in the same league as YouTube.

The larger point is youTube should sell its own ads. As should search. Double click as an agency that sells ads for other websites shouldn't be allowed to sell to the previous google properties, and vice versa.

YouTube has been profitable in recent years -- thanks to an investment in hardware transcoding reducing costs. So that is potentially separable.

One point to mention is that there are two different "Google Ads". Search ads are very different from page ads (DoubleClick). You could certainly take away the DoubleClick part, but separating Search Ads from Search is much harder.