“extremely expensive” is a bit of an overstatement.
Youtube proper, not the rest of Google, is tens of billions in the black, annually.
They reached this level of control over the market by running without video ads for a long time, forcing competitors to close out or not even open into the market without similar money backing. Turning around now and forcing tracking and ads should open them up to antitrust suits.
It’s all arbitrage. If you can afford YouTube Premium’s price, and don’t mind the tracking, go for it. But all this ad blocking and alternative front ends MIGHT come to half a billion annually. uBlock has around 15 million installs, each installed user- assuming all separate and unique and blocking YouTube- would have to deny YouTube $1000 annually for it to be affecting their revenue.