A windows 8 app was designed previously that was just a link to the YouTube’s mobile site, later on, Microsoft designed a new YouTube app that let users to navigate, watch and share YouTube videos within the app.
Google generates its revenue by running ads in the videos and the videos up loaders do the same too, however, Microsoft has disabled the ads in the videos which is why Google has dispatched a cease and desist letter to Microsoft asking to take down the app. Microsoft has responded to the letter and has asked Google if they allow access to the necessary APIs. It is now up to Google if they allow access to the APIs or not. Microsoft has said that once access is granted they’ll put ad support in the app.