Google's plan to start taxing pirate sites in the search results, more specifically, to demote sites that get a lot of "valid" DMCA takedown notices, has its fair share of criticism and rightfully so. Among the big issue, there was also the problem of YouTube not getting the same treatment.
At first, the speculation was that, since YouTube has a separate takedown notice system, any requests would not be taken into account by Google's search algorithm.
But Google came out and explained that that's not case, quite the contrary. All YouTube requests are fed back into the system and the algorithm takes all of them into account.
What's more, YouTube will be one of the few sites where Google has the most accurate data of this sort, since it has access to all of the requests. By contrast, it will only have access to requests it receives for other sites but not requests that go directly to those sites.
So YouTube is not given special treatment, or in any case, any special treatment it receives is negative. The reason Google said YouTube won't be affected by the change is that the algorithm looks at other factors beyond takedown requests, though Google is not detailing what those other factors are.
yet Google says the algorithm is smart enough to protect large, legitimate sites and sites that work with user-generated content.
This should give some relief to sites falling into this category. No Facebook, Twitter, YouTube, Vimeo, Dailymotion and so on and so forth, is going to be affected.
This is of little comfort to sites operating in a gray area or sites of an unproven legality. These sites may be legal, but still get penalized, massively in some cases, by Google. Cyberlockers are an obvious target. MegaUpload may have a good chance of being deemed legal. But that would not matter much; were the site to be live today, it would most likely be affected by Google's algorithm change.