Sure you might get tighter control over advertising, but youtube would also be forced to do things like show you x% of content made in your country/language, resulting in state mandated control of the content you see online and potentially limiting/warping international audiences for content creators, and potentially other ramifications I'm not considering.

This is false. You can create laws restricting advertising without creating other laws forcing companies to display domestic content. The point about the Canadian government wanting YouTube to promote domestic content is irrelevant.