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Separately, Microsoft and Apple have announced that both company's browsers will boycott VP8 in favor of H264, which is encumbered by more than a thousand patents.. But if VP8 becomes ubiquitous on the Web, that's a hard position to maintain.  

In depth technical discussion about Flash, HTML5, H.264, and Google's VP8.  Excellent.  Read the comments.  Bottom line - Google has the juice to put Flash and H.264 in the dirt.  The YouTube acquisition turns out to be very strategic. excerpt: The internet has been filled for quite some time with an enormous number of blog posts complaining about how Flash sucks-so much that it's sounding as if the entire internet is crying wolf.  But, of course, despite the incessant complaining, they're right: Flash has terrible performance on anything other than Windows x86 and Adobe doesn't seem to care at all.  But rather than repeat this ad nauseum, let's be a bit more intellectual and try to figure out what happened. Flash became popular because of its power and flexibility.  At the time it was the only option for animated vector graphics and interactive content (stuff like VRML hardly counts).  Furthermore, before Flash, the primary video options were Windows Media, Real, and Quicktime: all of which were proprietary, had no free software encoders or decoders, and (except for Windows Media) required the user to install a clunky external application, not merely a plugin.  Given all this, it's clear why Flash won: it supported open multimedia formats like H.263 and MP3, used an ultra-simple container format that anyone could write (FLV), and worked far more easily and reliably than any alternative. Thus, Adobe (actually, at the time, Macromedia) got their 98% install base.  And with that, they began to become complacent.  Any suggestion of a competitor was immediately shrugged off; how could anyone possibly compete with Adobe, given their install base?  It'd be insane, nobody would be able to do it.  They committed the cardinal sin of software development: believing that a competitor being better is excusable.  At x264, if we find a competitor that does something better, we immediately look into trying to put ourselves back on top.  This is why

Google I/O, on the other hand, is about more than just the Chrome Browser-which was barely mentioned in the keynote. Mobile Analyst Sascha Segan had a theory about Google's seeming HTML5 obsession. It's an open "standard." Talking about standards makes government regulatory bodies happy. Google, which grows bigger and more powerful by the minute, is under almost constant scrutiny-look at the trouble it's having completing its AdMob acquisition. If you talk open standards, the feds may assume that you're a company looking to do no harm and to work in harmony with everyone else. It's not a bad theory, but I don't buy it. When looked at alongside other announcements Google made yesterday, you see a company trying to rebuild the Web in its own image. Google wants you to use HTML5, but, like Microsoft, it likely wants you to build things its way. Don't be surprised if little pet tags start to creep in from all interested parties. And then there's video. Google introduced a brand new video code that'll work, naturally, with HTML5 and, conceivably, Flash. It's called VP8.

Adobe has already announced that they'll be adding VP8 support to Flash.