They almost certainly are running at a loss. Same as Twitch, their parent companies are generally okay with it, because they also serve as pretty solid tech demos for other services they offer (YouTube runs on Google Cloud Platform, Twitch runs on Amazon Web Services), and that pays off indirectly.

Moreover, their parent companies can use them as free advertising. Google about to launch a new phone? Guess what you’re gonna see ads for!

I think the term for this is “loss leader”

Big businesses are perfectly capable of releasing financial documents indicating what branches are making and losing money. If they don't do so, there's a good reason for it. Often that reason involves them doing things that are either shady or lying to the public about what's actually happening.

We should not give them the benefit of the doubt in situations like this, because we would only be feeding their manipulation tactics.

Number of ads does not necessarily scale linearly to amount of income. If the ads alienate viewers, then they become worth less. I know I personally watch less when they started sometimes subjecting me to 30 seconds of unskippable ads to watch a 90 second video. Recently, I hit "skip ad" and it took me to another ad, which made me less likely. The other day whole watching a video someone told me to watch, I paused to look at some text. After a few moments it started rolling an ad while I was trying to read the text. The more this happens, the less likely I am to watch. Wild be interesting to know statistics on viewership versus more obnoxious ad behavior, but there's likely at least some decline in per ad avenue versus number of ads crammed in the face of viewers.

Youtubes video platform's annual ad revenues amounted to 31.5 billion U.S. dollars in 2023.

Costs are $2.0 billion a year for hosting fees, if you were to run YouTube on AWS.

Take off creators fees and you are still in the black.