I will agree with you to an extent but:
To sign up for social media or even a gmail account, one has to provide a phone number for verification.
Yes and no. Many of them you can not use a phone number if you know how (Sign up with Gmail) but it shouldn't be any surprise because all of these companies are data mining and advertising operations.
Obviously you're posting to the alternative right now.
Youtube doesn't work when not signed into a Google account
Yes it does?
or if one is connected to a VPN
That does complicate things. Sometimes you have to switch servers, but for the most part, it still works.
Even downloader programs like yt-dlp and freyr have been rendered useless
I downloaded 78 videos yesterday with it?