The obvious problem with such tools is that it may allow bypassing YouTube's ad-wall, and as a website owner I can see why that is problematic. It is bad enough that local GDPR interpretations can practically prevent website owners from monetizing their websites via interest based ads.
For YouTube it probably does not matter as much it would to smaller sites and bloggers, but it is still a violation of their TOS. So, if you want ad-free, consider simply paying.
Besides, I am personally not too worried what Google might be using my data for. Thankfully, Google is owned by a US-based company – I would be more worried if the company was placed in China, Russia, or any other country that does not care about freedom rights at all.
Of course, there is always the risk of data-leaks, and that's a valid point – but then why do we tolerate that the government has data on us!? That's even worse than a company tracking us!!