A video I uploaded to YouTube was flagged for content - said content was a short bit of "Ace of Spades" played over a tannoy speaker sytem between commentary of armoured vehicles roaring around the track just meters from me, all being picked up by the rather tinny microphone in my camera.
In this case I flagged an appeal and the flag was lifted (incidental background music from public transmission, not the intended video content and so not a problem)
If they are capable of that, the law should be that content ID filtering should be enabled.
It's not that Google can't do it, nor that it would be expensive to do it. They just don't want to as the illegal sharing allows them to increase their views, thus their ad revenue, and it's a loophole.