[Metrop0218]

They didn't 'cave' on the YouTube app. Google wouldn't allow it and was using it as a means to wage ecosystem warfare.

It was a pretty stupid/ugly fight that went back and forth: http://www.theverge.com/2013/8/15/4624706/google-blocks-wind...

[Touche]

Google enforced their pre-existing API terms, that's not "Waging warfare".

[danudey]

They also stipulated that Microsoft's app be an HTML5 app, and not a native app (which is what the iOS/Android clients are), for no reason I was able to discern or theorize at the time. And thanks to deficiencies in the Windows Phone web engine, that proved impossible to do effectively.

They also refused to provide whatever information was necessary to allow their native app to display ads appropriately.

Basically, regardless of how Google explains their position, it really feels like their goal here was to prevent YouTube from being easily/effectively accessible on Windows Phone devices. Or at the very least, they had zero interest in getting WP owners onto YouTube.