Perfect example of stacking the deck in your favour. If Google says no, they look like hypocrites who aren't practising what they preach. Very gutsy move Microsoft, well played.
Microsoft Legal: No way! We may get sued and lose!
Microsoft Strategy: Okay, I see, how much will we lose?
Microsoft Legal: Maybe 2 Billion in damages, maybe 5 Billion with a big B in the worst case.
Microsoft Strategy: Okay, Finance Department how much cash do we have?
Microsoft Finance: 75B billion cash in our bank account.
Microsoft Strategy to Dev Division: Okay, make the YouTube app, oh and by the way stick a download button in there too.
Also, if WP allegedly has such low adoption that Google doesnt feel the need to make an app, how much revenue can the WP app hurt?
Vimeo and Yahoo mail have WP apps but Youtube and Gmail don't. Go figure.
The download button, on the other hand, is a completely different kettle of fish. If people start using Microsoft's Windows Phone YouTube app to download and distribute YouTube video I think that will have tons of impact, way beyond the existing, lower-profile downloaders, no matter how tiny WP's adoption is.