My understanding is that Google does not sell user data to 3rd parties. It's much more profitable for Google to sell targeted ads that indirectly use that data (without giving the data away), and also avoids the potential legal and PR ramifications of selling user data, especially since users trust Google with a lot of their personal data.

They might use your viewing history to target ads in other places. And they definitely use aggregate/anonymized viewing patterns to suggest similar videos people might like, but I don't see an issue with that.