Why is competion in the media space through small & independet news outlets a bad thing? If I realize a media outlet provides low quality or baised news, I choose not to watch it. Only Orwellian authorities do not like that!
Like everything else related to content decisions made by free services like youtube, it comes down to advertising money. Advertisers don't want their products marketed underneath a video about how the holocaust didn't happen or how covid was fake.
It really, really, really sucks. We're letting some of the most immoral and unethical organizations dictate what is acceptable online based purely on how it will affect their profits.
I assume they're worried about people with less discerning judgment. I know plenty of people who get all their news from YouTube channels and send me videos about how Italy hacked spy satellites to flip votes to Biden, how COVID vaccines will permanently change your DNA, how Hamas hasn't actually done anything wrong, how you don't really need to eat or drink anything to live except sunlight, how the government staged the Maui wildfires, etc. Regardless of how paternalistic you believe YouTube should be about such content, they probably don't want that to become the association everyone has with "YouTube news".
I'm pretty sure those people are still going to spout rumours even if the only source of news is "official" channels. Does anyone think that dictating what news is acceptable will actually work? Every authoritarian regime in the past 100+ years has tried this and failed for the most part.
Those examples are a whole lot less concerning than millions of people going out to be slaughtered or slaughter others in some war because broadcast or printed media told them to.
It really, really, really sucks. We're letting some of the most immoral and unethical organizations dictate what is acceptable online based purely on how it will affect their profits.