Microsoft is supporting H.264 because YouTube - which is owned by Google - has adopted it, and because it's what Apple supports in the iPhone and iPad. Microsoft is therefore doing what users want, but does it really have a choice? It does not have the market power to go against Apple and Google, even though it has a similar and perhaps better technology of its own. VC-1, which is based on Windows Media Video, is just as much of a standard as H.264/AVC, and both are licensed by the MPEG LA. (Yes, Microsoft is one of the rights holders and will profit via fees paid to the MPEG LA, but Apple's self-interest in backing H.264 is even greater.)
HTML5 will be very important in advancing rich, interactive web applications and site design. The HTML5 specification describes video support without specifying a particular video format. We think H.264 is an excellent format. In its HTML5 support, IE9 will support playback of H.264 video only.
Ogg Theora was, in fact, removed from HTML5 mainly on Apple's insistence. In July, when Ian Hickson announced that "I have therefore removed the two subsections in the HTML5 spec in which codecs would have been required" (Ogg codecs dropped from HTML5), he said "the current situation is as follows":
Apple refuses to implement Ogg Theora in QuickTime by default (as used by Safari), citing lack of hardware support and an uncertain patent landscape.
Joshua Talbot, security intelligence manager at Symantec Security Response, added that such an attack requires a multifaceted and sophisticated method of incursion.
Google has implemented H.264 and Ogg Theora in Chrome, but cannot provide the H.264 codec license to third-party distributors of Chromium, and have indicated a belief that Ogg Theora's quality-per-bit is not yet suitable for the volume handled by YouTube.
Opera refuses to implement H.264, citing the obscene cost of the relevant patent licenses. Mozilla refuses to implement H.264, as they would not be able to obtain a license that covers their downstream distributors. Microsoft has not commented on their intent to support video at all.
Finally, Hachamovitch appears to be contributing to the war against Adobe because IE9 won't support Flash but IE8 didn't support Flash either. Nor did IE7, IE6 and so on. Flash support has always been provided via an Adobe plug-in, and I can't see any reason why this wouldn't continue with IE9. Microsoft also plans to have a Flash plug-in in Windows Phone 7, though it will not be included in the first release.
But that doesn't mean Microsoft wants everyone to use Flash. It is still developing its own system, Silverlight, which it claims is better than Flash for streaming media, and which fits in with Microsoft's own development environment rather than Adobe's. Microsoft wants to replace Flash by producing something better, not by blocking it through a dictatorial fiat. That way, users and developers have a choice.
Microsoft is supporting H.264 in IE9 but not its own system, VC-1, or the open source Ogg Theora. It will continue to not support Adobe Flash, though you can expect it to support its own rival system, Silverlight.