No its not, you know since flash is disabled.
>Google is asking Microsoft to respect terms of service - nothing more, nothing less.
And they did respect the terms of service with their new app - nothing more, nothing less. Using a HTML5 client is not part of that terms of service.
>The only thing that's clear is that Microsoft is using its customers as pawns in a PR game against google.
I would have to agree with you on that, especially with their scroogled ads campaign. However without such public announcement, no one will ever know what the reason behind the app's breaking. Remember when google maps was blocked on Windows phone's browser? A negative PR was required to caused Google revert the stance.
>AND THEY ALL WORK PERFECTLY WELL ON YOUR WINDOWS PHONE!
Again, no they don't work perfectly and Youtube is sadly not something you can just substitute!