> So why are they spying on me when I still pay them

Since you pay them you have an account and is logged in. They do use the data they have collected about you to serve you targeted videos even if they don't serve you targeted ads, they say that in their privacy policy document. Targeted videos are for your convenience.

If you don't want it to target videos to you you can disable all that data collection here, at least I can (Not sure if you can outside of EU):

https://myaccount.google.com/yourdata/youtube

So go and disable all that if you feel their video targeting isn't worth collecting your data, but there is no way for them to target videos without having any data about you.