Of course it's a competitor of yt. If you download a video, they don't get ad revenue.

I've had Youtube Premium since it was introduced and I still use yt-dlp because it's the most convenient way for me to make an mp3 from a video so I can listen to it offline. I don't think they care. They probably care about music industry getting worked up about it if it was more mainstream though. This is annoying because I don't even download music, just podcasts and interviews.