Unlike with Reddit, this was already clearly and obviously against terms of service.
IIRC, you can make an alternative front end to YouTube, but it has to include the video ads. Somewhat ironically, many of those aren't even from YouTube themselves, but especially on videos with music, they're assigned by the RIAA to cover licensing costs.
If Reddit had done what YouTube does and just added a requirement for apps to display the sponsored posts, there would certainly be some mildly annoyed users, but it would not have come to the current level.
You have to agree to it in order to view YouTube. If the software doesn't present those terms, it in itself is in violation.