Apple is not trying to give Google any more money on anything. First it got rid of Google Maps. Now it has done away with Google’s YouTube app. Apple stated that their license to include YouTube in iOS had expired. It may sound like its like a big deal but it really is not. You can still use YouTube on the web and Google is in the process of making a standalone app as you read this. The new YouTube app that will be available in the App Store for free. Apple wanted the iOS experience to be just iOS and have nothing from Google on its new baby. I for one look forward to see what the new iOS YouTube app looks like. The old one though helpful was really not a great user experience.
If you do not update to iOS 6 you will be fine. Apple said that OS 5 devices will not have the app removed. Apple didn’t want to push out that only took away an app. Also it will only be a matter of time before the jailbreak community addresses this loss by a tweak to integrate the new Google YouTube app with iOS 6.
Apple’s statement word for word:
Our license to include the YouTube app in iOS has ended, customers can use YouTube in the Safari browser and Google is working on a new YouTube app to be on the App Store.
Update: Google now has its own YouTube app in the AppStore. The link is right here: YouTube App.