All claims in this process dealt with the DMCA system, not the Content ID system, and YT handled it in the only way they legally can throughout the entire process.
The safe harbor provisions of the DMCA are a carrot, not a stick. They do not impose any responsibilities upon YT, they only provide benefits should YT voluntarily respond to complaints in a specific way. YT does not accept every DMCA complaint at face value, and they aren't required to.
YouTube goes FAR beyond what the DMCA requires, they actively filter EVERY video through a data lake of fingerprints for copyrighted music/video and this process biases HEAVILY toward false positives. It not only takes down videos cases of accidental infringement (e.g. a vlogger walking past a radio in public) but also suffers from well-documented cases of just plain getting it wrong. Musicians often get their own music taken down, even when it contains no samples.
Many content creators have fallen back to playing NO music at all in their videos, and they still get hit by it. YouTube has been silent on the matter, not to mention on how that's even possible.
The algorithm is so effective that police have taken to playing loud copyrighted music when engaging in actions that they don't want spread via social media.
At this point, it's getting hard to ascribe the awfulness of the fingerprint-driven auto-takedowns as mere incompetence.
That's called Content ID and was created in response to Viacom dragging YT through court for not preemptively stopping people from uploading episodes of Spongebob. Viacom was planning to take it further up the appeal process until a settlement was reached, almost certainly with the goal being "you upload your copyrighted material and we'll automatically scan every video upload to remove it". Of course, other copyright holders weren't going to let Viacom have all the fun, so YT expanded it to allow any big-name rights management firm or copyright holder to use the system.
Despite this, everything mentioned in the torrentfreak article was handled under the official DMCA process, and they handled it as they should have, as they disabled access to all videos immediately until the counter-notice was posted by the claimee. Eventually they started asking the user for proof of identity after they suspected he didn't represent Bungie, but that's not a requirement in the DMCA process.
Separately, YT does often go to bat for its creators if/when they suspect supposedly infringing content is actually protected under fair use, eg. recently when "Vantage Media" was trying to take down all footage of the trailers for Kevin Spacey's new movie, Peter Five-Eight[1]. This is still only wrt DMCA, as Content ID is designed to allow rights management companies to control their content on YT entirely (with no regard for fair use, on purpose) as YouTube doesn't want to get on the bad side of their partners in the Music (YouTube Music[2][3]) and TV/Sports (YouTube TV) space.
