Jobs' terse reply to the question "What did you make of the recent VP8 announcement?" left little doubt about Apple's views on the matter, because the linked report Jobs returned, written by x264 developer Jason Garrett-Glaser, castigated the new specification for video compression as being weak, incomplete, and undoubtedly encumbered by patent issues.
Note that x264 is an open source project for encoding H.264 compliant video. It has no inherent bias in promoting the H.264 specification over VP8. Garrett-Glaser has been a vocal critic of elements of the MPEG standards process, the x264 project itself is an effort to get around commercial licensing of MPEG's technologies, and the similarities between VP8 and H.264 mean that x264 could likely be adapted to encode VP8 as well.
Jobs' problem with VP8 is not ideological
Critics of Apple have settled on condemning the company for not rushing to embrace the free new video codec, which Google acquired as part of the technology portfolio of On2 and has published as an open source, royalty free specification. However, the only real value of VP8 over H.264 is that it is royalty free; it's not as sophisticated as the latest MPEG-4 specification in terms of compression quality or efficiency, nor does it offer a comparable technical range of use.
VP8 can't currently support Apple's needs as a mobile-optimized codec for its iPods, iPads and iPhones, nor is it suitable for high definition video encoding. VP8 is targeted directly at the web, where Google, Mozilla and other partners hope to use it to deliver video without the royalties required by H.264. Apple has no issue paying royalties to license MPEG's H.264 technologies because the royalties are not very expensive. The H.264 licensing fees are really only a relevant cost issue for groups like Mozilla wanting to give their software away for free.
The problem is that video experts such as Garrett-Glaser are reporting that VP8 is not only unfinished and incomplete, but will also run afoul of the broad range of patents covering the latest video compression and decoding technologies. Those patents are held by a wide consortium of vendors who have pooled their technology together under the direction of the ISO's Motion Picture Experts Group.
Apple is not the patent holder to worry about
Most reports on the issue have focused on Apple's membership in the MPEG coalition in order to write up a fashionably dramatic tale of conflict between Apple and Google on the issue of the VP8 codec.
However, the reality is that the patents related to H.264 are held by a large number of companies scaling from embedded chip makers to video software developers to university research groups to Blu-Ray hardware vendors. Apple has a minority stake in the MPEG-4 patent pool related to video codec technology, and would actually benefit from a sophisticated yet free video codec, were one to exist.
Rather than Apple, it is the actual codec patent holders that will come after VP8 looking for royalties, and unless Google subsidizes the world's use of VP8 (and it will not), it appears certain that anyone who uses the "royalty-free" codec will end up having to pay royalties for its use anyway. Because it is not immune to patent royalties, all VP8 really offers in comparison to H.264 is less sophistication and a more incomplete and immature specification.
A strangely ideological puzzle
The apoplectic fit surrounding H.264 and its patented technology is quite bizarre in that the MPEG-4 working group that developed it didn't invent some new patent problem that hasn't existed before and desperately needs to be solved.
Those insisting on calling H.264 "proprietary" because it is not completely free have never referred to other open, but not free standards (including the MP3 audio format), as "proprietary." Additionally, it was Apple's iTunes that spearheaded the move from MP3 toward the more modern and efficient AAC audio format in order to shift the world's technology from the more expensive to license MP3 format to the cheaper and/or free to use AAC. If there were a cheaper, suitable option to paying for H.264, Apple would similarly jump on it.
Back in the early 2000s, both Microsoft and Sony were pushing to replace MP3 with completely proprietary formats: Microsoft's Windows Media Audio and Sony's ATRAC. None of the current critics of H.264 in the mainstream tech media had any issue with that potential shift toward completely proprietary and closed standards back then. It was only the success of the iPod that drove the world toward AAC as an open standard and preserved MP3 as a compatible fallback.
The web wants to be free
The web presents a slightly different set of circumstances because open source projects like Mozilla's Firefox can't legally bundle support for H.264 without paying royalties on the technology. It would be ideal if the world had video playback technology that was competitive, efficient for use on mobile devices, and completely free.
Unfortunately, this simply does not exist in the world of video where massive amounts of research and development go into developing new technology to encode, transmit and decode video efficiently. That results in researchers and scientists needing to get paid for their efforts.
The last time the web's media was significantly encumbered by a patent issue was with the GIF image file format, which was not itself patented, but which used a compression technology that Unisys claimed to own in the mid 90s, long after GIF had entered wide use on the Internet. The company vilified itself by demanding significant royalties from all companies that used or created GIF images commercially.
An effort to replace the patent-encumbered GIF with the new PNG format was initiated, but despite the creation of PNG as a technically superior, royalty free, and patent free new format, it was nearly impossible for the world to switch away from using GIF. While work on PNG started in 1995, it was not officially recognized as an ISO standard until 2003, when the patents on GIF finally began to expire (making the GIF problem a non-issue). Microsoft's Internet Explorer didn't effectively support PNG until 2005.
PNG is a relatively simple image format, dramatically less complex than the technology needed to encode, deliver and decode high quality video over an unreliable transport network like the Internet. That makes PNG's decade long march toward replacing GIF a cautionary tale for those expecting VP8 to serve as an immediate drop-in replacement for H.264, which has become the established video format on the web, for mobiles, and for a wide range of other uses ranging from video games to Blu-Ray.
Is VP8 patent encumbered?
Like GIF and its encumbrance with a compression-related patent, VP8 is said to be based closely enough upon H.264 so that the MPEG Licensing Authority will demand patent royalties for it. MPEG LA is already investigating and expects to set up a licensing program for collecting VP8 royalties, according to a report by All Things Digital's John Paczkowski.
Unlike PNG, VP8 is not technically superior to H.264, making it that much more difficult to propagate across the Internet as a new video standard, even if it were not patent encumbered at all. And unlike the GIF patents, the patents on H.264's brand new technologies won't expire for a long time.
Google maintains that it has reviewed the VP8 technology it acquired and is sure that nobody will have to pay patent royalties for the technologies it uses. However, Google's acquisition of On2 was rushed through in January, and barely six months later the firm's existing VP8 code implementation is being pushed out as a "specification," much the same way Microsoft rushed its Office file formats through a standards process to avoid having to support the already formally standardized OpenOffice formats.
Google was demonstrably in a hurry to quickly deliver a fix for the issue Mozilla raised about the use of H.264 on the web just last summer. In contrast, Apple, Netscape and Sun all spent several years working through the code for projects they planned to release as open source (including Darwin, Mozilla, and OpenSolaris) in an effort to avoid any patent-related surprises. No project has ever raced code from fully proprietary to open source in six months, casting serious questions on the quality of Google's supposed vetting process for VP8.
It's therefore no surprise that Microsoft is saying it won't bundle support for VP8 with Internet Explorer, even though the code is already available, and that Jobs is intimating Apple's thumbs down for the H.264 alternative Google is publishing, but not offering to indemnify from patent attacks.