Yes. The API is an HTML5 iframe, (and it takes care of both movie and ads). Microsoft refused to use that API for their own reasons.
> Did Google's obligations to content owners not apply to the other platforms where ad-free official clients existed?
The iOS client is the only ad-free official clients in existence. It was created in 2007 with a five year license agreement to Apple. I have no knowledge of the details, but it is possible that Apple actually paid in lieu of showing ads.
Either way, there is no reason an 2007 agreement between Google and Apple should apply to Microsoft in 2013.
They loosen this requirement for google's own youtube clients because they can push new version of those apps whenever they like. They had no guarantee that MSFT would respond to their requests for changes in a timely manner in the future.
Why didn't MSFT want to use an iframe? Because arrogant ignorance of the open standard of HTML5 is part of company DNA. Any web developer can rant for hours how crappy IE6-9 are and what a drag it is to maintain compatibility with IE when you are building a modern webapp.
To remind everyone that IE11 will be dead on arrival, I'm copying some html5test results: Chrome - 463 Firefox - 410 Safari - 378 IE 11 - 355
But if MSFT bothered to properly implement HTML5 then a) they wouldn't have difficulty building a youtube app in accordance to the google's terms and conditions b) WP users would enjoy better browsing experience c) developers wouldn't have to deal with the compatibility mess caused primarily by IE6-10 and not yet released IE11
Everyone would win.
YouTube also offers a Flash based API to show videos with adverts. If HTML5 wasn't feasible for Microsoft they could have paid Adobe for a licence to use the Flash runtime in their YouTube app.
