Google no longer supports H.264 in its Chrome browser as continuing support of H.264 can be risky for the company in the long run. Chrome users can become increasingly more reliant to this codec and consequently, Google will become dependent on MPEG LA for the H.264 license. MPEG LA, as the legal owner of H.264 format, requires that royalty to be extended to the video content distributors, which may significantly affect Google’s subsidiary, Youtube. Of course, the license fee is ridiculously small for Google. Until the third quarter of 2010, Google’s combined profit for the year, reached about $17.5 billion and if Google paid $5 million for H.264 license on Chrome that simply means almost nothing.

The license covers a 5-year period, and if Google renews its license this year, it needs to renew the license again on 2016 and at that year, Google’s dependence on the codec will be even greater. Fortunately, the license agreement specifies that at each renewal the royalty rates can’t be increased by more than 10 percent, to protect the licensees.

Google bought On2 Technologies assets and created WebM format directly from the VP8. WebM is released as an open source technology and as the result, there is no indemnification from patent infringement. Google still vaguely assures users that its royalty-free patent is what users want.

AVC/H.264 is now a commonly used format and if there is a component of this codec that is subject to patent infringement, someone certainly has done so already. We still do not know about the details of WebM until it is officially released to the market. Codec is a complicated container with many components and often, some of them are already patented by some one previously. If WebM has parts that are subject to a patent, a cunning patent holder may wait for at least five years and reap millions in a lawsuit. Google may be aware of this possibility and could already be prepared to wage a long and very costly patent battle.

Google, like many IT giants, is making a lot of money with its services. Its gigantic operation requires a suitable infrastructure planning. Its most costly infrastructure is certainly the search business and followed by Youtube. As the leading video sharing site, Youtube is expected to support a wide array of formats and that’s an expensive requirement. Google’s decision to stop renewing H.264 license is not limited to the Chrome Browser, but also the SANs (Storage Area Networks) in Youtube’s architecture.

Youtube is a massive service and for the “dogs” keyword alone, you’ll find more than 1.5 million videos. Google didn’t want to lag behind the advances of video technology and in 2008, HD videos began to be displayed on Youtube, which implies files at larger size and higher connection requirements. Google and its subsidiaries are getting bigger. Therefore it is understandable why Google chooses to rationalize its services, including Chrome and Youtube. To reduce costs, Google may need to completely transcode Youtube’s library into fewer formats and it won’t be easy.

Fewer formats equals to simpler architecture and eventually lower costs, Youtube is a big player in online video segment and common users need to go with what Youtube currently uses. Many mobile devices, including Android and iOS devices, are designed with multimedia features in mind, and manufacturers can’t afford to deny their buyers a full access on Youtube. Sooner or later, WebM will become a widely used format in IT world.