Following Google's demands for Microsoft to remove its Windows Phone YouTube app, Microsoft has responded saying it's happy to include advertising. Google sent a cease and desist letter to Microsoft recently, with concerns that the Windows Phone YouTube app does not display ads. "We’d be more than happy to include advertising but need Google to provide us access to the necessary APIs," says a Microsoft spokesperson.

Microsoft appears to want to rectify the situation, noting Google CEO Larry Page's comments at I/O today. "In light of Larry Page’s comments today calling for more interoperability and less negativity, we look forward to solving this matter together for our mutual customers." Microsoft recently released an update for its Windows Phone YouTube application to support sign-in, downloads, and a full YouTube experience. The application has been available for just over a week, but Google has demanded that it be removed by May 22nd for violating its YouTube API rules.