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> I'm curious if/when market dynamics will limit the extent to which Microsoft/Google do this.

Market dynamics in this case is just good ol' market failure. Google can 10x the number of pre-roll ads on Youtube, and lose maybe 1% of their audience. Where's every going to go, Peertube? Vimeo? Dailymotion?

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Audience is going to Instagram Reels, TikTok. Many small business find showing Ads there convert better than on Youtube. Also, they are less distracting and more immersive for showing Ads compared to Youtube.

Other Social Networks have to bring a better Search Experience and Long Duration video. Then Youtube can easily have a challenger.

Also, showing too many pre-roll ads might reduce the ROI on Ads for the advertiser. I believe an Ad won't convert as good if it's part of a series of Ads.

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