Microsoft clearly knew this would be unacceptable, and obviously would have known Google would have to tell them to remove the app.
So it's clear that the whole thing is an exercise from Microsoft, I suspect, to paint more of the "evil Google" picture that they are working assiduously to establish. Now they can point to Google and say "look, everyone, Google is taking away your toys, they must be evil!".
The problem they may have is that this is pretty transparently unacceptable on their part, and even worse, it doesn't jive at all with their general stance on intellectual property (Android infringing on their patents, etc.) where they paint themselves as the good guy who always licenses IP and expects others to do the same.
And they would be right. It's not mutually exclusive that Microsoft is doing this evilly on purpose, and that Google is evilly holding back Youtube from Windows Phone on purpose.
You can can get away with this if you are a small team with a limited audience, but MS is either incompetent or has calculated this outcome.
Quite typical actually. Google is the only tech giant with a slogan like "don't be evil", yet they are the only evil tech giant at the moment (Microsoft has gotten a lot better the last few years imho).
The fact that Google gives the violation of their agreement as the reason doesn't mean it IS the real reason behind it. There are many other youtube apps (like MetroTube) that do the same thing, but they don't get removed. It's a fact that Google has been boycotting Microsoft for years. They blocked GMail syncing for Windows Phone devices, they disabled Google Maps for WP (it worked before, but then they just blocked all WP devices), and now they do it again.
Exactly how long do you think, say, Viacom woulds tolerate a high-profile, name-brand YouTube app that blocked ads and supported video downloads? And what do you think Viacom would do to Google if Google's response to that app was turning a blind eye?
Sure, you can argue that "well Android has majority market share so it's in microsoft's advantage to have apps in that platform!" - and you would be correct.
However, that doesn't excuse having the web views for Windows Phone on gmail and maps (and maybe youtube?) be significantly worse than those for iOS/Android. Like, the work has already been done - Google just does not redirect WP users to the "pretty" sites. If you manually enter in the iOS/Android URL on WP, it works fine. It's just not defaulted. And that's lame.
Crossposting my own comment from another thread.
So, for years, Google's stated reason for lack of a Youtube client was that Windows Phone didn't have enough marketshare, and now suddenly it has so many users that it loses so many ad impressions because Microsoft's Youtube that the content creators are suffering because all the millions of freeloaders using Windows Phone?
i.e It doesn't care enough for the ad impressions on Windows Phone to itself make an app , but when MS does, the loss of the same revenue is the reason for sending the lawyers in and pulling the app?
I'm sure if Microsoft merely removed the ability to download videos and restored ads, Google would not have any problems with it.
The fact that MetroTube is so successful disproves the conspiracy theory that Google is trying to prevent Windows Phone users from being able to use YouTube.
This isn't a "We don't like WP" issue, this is a "your app blatantly violates our ToS and we're not okay with that" issue.
You are entitled to your opinion, but I must say that quite a few people around here, me as an example, do not share it.
We still remember the ISO Office XML shenanigans, the vague Linux patent threats, the still ongoing Android patent extortion, the UEFI requirement - that's on par with Microsoft's old evil, imho.