From Mike Jazayeri, Product Manager on the Chromium Blog:
Though H.264 plays an important role in video, as our goal is to enable open innovation, support for the codec will be removed and our resources directed towards completely open codec technologies. Google is dropping support for h.264 video in the popular Chrome browser in favor of Vorbis and WebM video. To “enable open innovation.” Yet Chrome ships with an embedded Adobe Flash player. Weird. h.264 is a licensed standard. You pay a license fee to play h.264 content in your software. Adobe Flash is a proprietary single-source (and 15-year-old) streaming technology. Completely closed, like Microsoft’s Word or Apple’s Final Cut.
Did you know Google also owns YouTube? Currently YouTube streams in h.246 for iOS and Android devices, and Flash video for everyone else. Is YouTube going to re-encode hundreds of millions of videos into the new format that has little or no installed base in Windows, Mac, iOS, Android, WebOS or Windows Phone?