Youtube just went ahead and demonetized or banned dozens of channels, that according to Youtube’s statement, did not violate the terms of service. They mostly did it to appease reporters and activists, one VOX reporter in particular. Consequently, the actions seem more like activism and open up the question, when shareholders and their representatives should step in, to limit the amount of political activism.
Basic Premises
Companies in the US have the right to choose with whom they want to do business. Thus, it generally should be up to Youtube, and the content provider to agree on terms or disagree and therefore decide whether to monetize it or not. As such, if Youtube chooses not to monetize conservative videos, as it has done now, or not to show ads before LGBTQ+ leaning videos, as it has done in the past, that should be purely a business decision.
Now some people might argue that it is the morally right thing to do. However, there is the slight problem that right and wrong are a matter of opinion. Just ask, Joe Biden about policies he supported at the beginning of his career, and you can see the personal development. Thus, taking the moral high ground one moment could easily land you into hot water the next, especially in the current US political climate.
Legal Issues
While there is nothing the content creators can do regarding the monetization, the current antitrust investigations could accelerate due to the actions taken. David Pinsen at Seeking Alpha has a great article about it and the repercussions for the share price.
As the US President aligns with the far-right concerning the tech companies, it does not take much to imagine, that the actions will increase the political pressure on the investigation. If they find, that Alphabet regularly violates antitrust provisions, it might spell trouble for current shareholders.
Advertisers
Youtube generates most of its revenue from advertisements displayed before and during the video. Both Youtube and the content creator take a cut of the revenue. Removing ads from a video thus means that Youtube makes less money.
On the other hand, if advertisements appear in front of videos too radical for the advertisers liking, the companies might pull their marketing from the video side. In the end, it depends on the target group of the advertisers and where they want their name to appear.
Often this is a dedicated balancing act. Mainly, as shareholders have an expectation, that Youtube maximizes the profits. As of now, there has been little to no communication, why Youtube acted, so we can only speculate about possible behind the scene motives.
Echo Chamber
Lastly, youtube has to handle the echo chamber of social media. The latest action was triggered mostly exclusively by a well-connected reporter. Mishandling the situation might have led to widespread outrage directed at Youtube, which in turn social media might have turned into an online mob.
In contrast, the outrage displayed by the supporters of the channels seems to be far more manageable, which is especially true, as few companies would want to be associated with anything that could place them on the right end of the political spectrum.
Conclusion
The heavy-handed and seemingly underprepared actions by Youtube make the steps seem politically motivated and less of a serious business decision. Notably, the number of wrong channels demonetized and later restored can make you wonder, whether there was any defined business strategy behind it or if they just acted out of instinct.
Any business with the risk of being in a similar situation should have a plan on hand to deal with it. This plan should include not only the legal basis and how to deal with the fallout, but also robust communications on how to ensure customers, business partners, and shareholders that the actions were taken deliberately and not on a fluke. A better preparation would also have limited the risk from being bullied in the future or from providing ammunition to the antitrust investigation.