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It uses an embed player, like how IMDb or any website uses it. When I added YouTube videos to my website, I observed that ads never show there, so I made it and added a sponsor block too. Now, I can watch videos on any device or share links without anyone installing anything.

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I also noticed embedded YouTube videos don't seem to play ads. I am planning to make a beat-aware YouTube player, so I was wondering how ads would affect the timing...

Some videos don't allow embedding though, for example the Formula 1 channel disallow it for seemingly all their videos: https://skipcut.com/watch?v=QGTErgNcpDM

Yes. Some videos are not allowed by channel owners.

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