But all G has to do is say 'yeah if you want us to feature your content, you must agree to X'
With 90% of the search market, half of phones, and who knows what percentage of the smartTV market, they could institute a death sentence to those they wanted to.
IF they wanted to.
As if google doesn't already abuse its power and weild it for nefarious reasons, or have massive anti-trust concerns? But god forbid they use their power to prevent others abusing theirs by forcing people to pay again and again for media they already own.
There's a reason they don't do that, in any business. How do you think e.g. anti-trust regulators would feel about that?
As a seller of widget X, there's no way I'd accept a product with a license that says they could just take it back anytime for any reason. No sane seller should agree to that.
Now, the terms for the movie rentals / sales would definitely be negotiated between Google and the content owner. And Google could of course make your no-DRM policy a line in the sand in those negotiations. But why would the content providers agree to that? There's plenty of other competitive platforms they can (and do!) sell exactly the same content on, being specifically on YouTube's movie rental system won't make or break them.
And then we get back to your original proposal, which was clearly that they'd be using all their unrelated properties as (highly unethical) leverage in the negotiations.
If that's not what you're proposing, maybe you could be really concrete about what you think Google would be saying in those contract negotiations? "We will be selling your movies without DRM; if you don't agree then X". What exactly do you think X would be?
It would be unethical to completely remove them from search. But would it be unethical to prefer partners and give them higher precedent in results?
As for what X is, I don't know precisely. They could easily update Play terms that no app my sell an item to a user that may be removed later. That would mean X would mean you weren't in Play Movies and TV, but also weren't allowed to sell movies via a Play Store App.
but also
"Why doesn't Google use their market dominance to do X"
That said, I agree with the principle of what you're saying. Google put a LOT of things in place on youtube specifically so the large publishers wouldn't go after them, and that has extended to everything else.
Google absolutely has a large responsibility in this, but it's also true they're not the only party with responsibility for it.