And to be clear this is literally what happened to Netflix and I think YouTube and a few other sites in the pre-Net Neutrality days. Of course we don't have Net Neutrality anymore either, so presumably Google is paying ISPs not to throttle, or ISPs are content with the 1TB/month cap they tend to have.

Also, that 1TB/month cap is just foot-in-the-door technique. It will stay 1TB or so as videos, games, websites, etc. continue to get larger and larger and then they will lean on Appeal to Tradition (logical fallacy) when people complain that 1TB/month isn't adequate.

Google can just say ‘if you’re on this network, you only get poor quality video. Come to one of the networks that support YouTube properly!’.

Remember that for a while they were just about the only site that could load Flash. YouTube is that important.

Most places in the US at least have two ISPs at most so it would probably not pan out so well if they tried to do that

That kind of reminds me of the Monty Python skit where two mafiosi try to shake down the army. Why in the world would Google pay up? Your average ISP needs YouTube to work well far more than Google needs one ISP.

German ISP Telekom is notorious for shenanigans like this, which is why I boycott them.