My kid recently got a second hand iPad tablet. On it, she uses YouTube Kids. I made an account for her. Now, they ask _me_ for consent, since she cannot legally give it. They throw ads at her about toys, but this is illegal in my country to target children with ads. Ads are supposed to target parents, not kids. Now, if it were one ad at start, I'd hate it, but they go further: in a 10-minute movie, the thing quits like 3 times to show my kid an ad. She barely has the attention span to watch the bloody vid! You know why they do it? Not because it is legal; because they get away with it. Law is irrelevant if it isn't uphold.
That’s the other thing as well, we need to spend more time upholding laws that already exist instead of getting distracted with these weird news publisher content regulations like Canada has.
I don't know if apple will allow you to do it on an ipad, but even very young kids can learn to use something like newpipe or yt-dlp which can download videos and removes youtube's ads. If nothing else you could download ad-free videos and copy them to a device so there's a massive library of safe media you've vetted and wont have to worry about.
You have the power to stop this: disable the app if you believe the ads are harming your child, or opt to pay for YT or another kids video service that doesn't serve ads.
One issue is that YT is possibly violating the law. A separate issue is that parents are allowing children to continue consuming harmful ad content on an app.