From the YouTube help page

"This feature was rarely used and had problems with spam/abuse so we’re removing them to focus on other creator tools. You can still use your own captions, automatic captions, and third-party tools and services."

That seems fair enough to me. Creators can still add captions, it's just viewers that can't add them without a 3rd party service.

If you are a monopoly you have little to no signal you have done a bad thing. It's not that they have no incentive to improve, it's that they have no understanding of what is or isn't improvement.

Some people are arguing about a reduction in spam or abuse, but it might also be a liability issue (but I don't know how or why).

Google gains a lot less span and abuse on its system by doing this.

My preferred solution would be better filtering and abuse handling, but at the moment this feature is a very mixed bag at best.