Everything. As I explained above, please reread.

> The app would still have to be updated when the API changes.

With an HTML5 API, the API can be stable and still support many new features, video formats, ad formats, etc without change. NOT SO if you don't let google have their iframe.

> Additionally, if that were a concern of Google's, why aren't their apps written in HTML5?

Because they can update their own apps whenever they want to, but they cannot force Microsoft to.

That's demonstrably false. Have a look at the "Jasmine" app for iOS - it's way, way better than the official iOS client, despite using the same HTML5 API. It does NOT, in any way, provide a degraded experience compared to the official app using.

> and instead execute whatever javascript comes from the Google servers, sight unseen.

Well, yes. Microsoft also doesn't vet the videos it is going to show - google might instead stream rickrolls. Google is not asking Microsoft to execute arbitrary javascript (which allows e.g. stealing credentials). They're asking them to use an iframe, which is perfectly sandboxed. And they actually need to run javascript for functionality - I don't know if you've noticed but Google keeps adding features like captions, annotations, multispeed, multiquality, etc - they need to run code so they can add more features and make them accessible to all.

> Google is refusing to provide a real API that deals in discrete chunks of data, where the consumer chooses how to interpret them. Even though Microsoft is willing to display ads or presumably do anything else Google asks for that its own apps do.

Well, Microsoft is refusing to let me sell Windows Premium addition DVDs for $10, even though I'm willing to pay them the $0.50 that a DVD costs, and displaying their logo and whatever it is they do themselves when they sell a Windows equipped computer on the Microsoft store.

Do you realize how stupid it sounds? Google/YouTube is not a charity, nor a utility, and not even a monopoly. They're accessible on Windows Phone, and they're happy to have Microsoft play according to the same rules they set for everyone else. I understand Microsoft is really not use to playing by the rules, granted - but that's hardly Google's fault.