One analysis of the situation shows that the app was using a revoked developer key. Either Microsoft failed to update it when they revamped the app to meet Google's requirements, or for one reason or another, Google has revoked the key. One possibility is that both tech titans never actually signed off on the revamped app. Or perhaps Google just made some changes to YouTube that need to be picked up on by Microsoft.
Considering that third party YouTube app MyTube is also having similar problems, it is beginning to look like Google is responsible for the problems with its streaming video app. Certainly the truth will come out and set somebody free.