Most servers are not able to access the Google API.
Invidious report of the same(ish) problem: https://github.com/iv-org/invidious/issues/4045#issuecomment-1674373088
How many people are using Piped, revanced, or the like? I doubt it is the majority. This move is highly likely more greed than anything.
Does Google care about our user experience? The short answer is no. Look at the intrusive ads, how long they are, them suggesting DRM, right wing pipeline, and more.
Look at how they treat their content creators. Demonetization, channel and copyright strikes, etc.
The list goes on. Youtube should and needs to be public. Internet is a utility and needed to survive by everyone. A video hosting service like Youtube is needed as well. Through every perspectice, Google is, ultimately, wrong in doing this.