I think they said that they technically don't block ads. They just don't implement them. If youtube were to somehow pack ads into the video stream, they wouldn't go around it. Though I'm sure that in such case an adblock extension would pop up very fast.
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Since the app has ties to creators, I get why they disapprove of sponsorblock, but... Why did they implement it if they don't like it?
Certainly there was big demand for it. I was hoping they'd eventually implement it as I'd been testing the app out
I get why they disapprove of sponsorblock
The app strips analytics and watch data preventing views from being counted. So the argument doesn't logically make sense. They're trying to make a moral argument out of something that doesn't and can't have any impact because the data used to justify watch-time and engagement isn't provided.
Are they even able to see when their baked in ads get skipped over?
Kinda. YouTube has stats about which times of a video are watched more proportionally for a single view. You can ironically usually use this data to see when a sponsor spot ends (to skip to it) since there will be a peak in the watch time curve.