By dropping H.264, is Google avoiding a trap or walking into one?

By dropping H.264, is Google avoiding a trap or walking into one?

Summary: Google's announcement that it will remove support for the H.264 codec from Chrome doesn't mention money at all. But that hasn't stopped Google's defenders from bringing up MPEG LA and its licensing fees as a primary reason behind this controversial decision.

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In Google's 250-word announcement about its decision to remove support for the H.264 codec from its Chrome browser, the word open appears eight times. There is no mention of money.

In fact, it's not about money. Google's royalty fees for the H.264 codec are literally a rounding error on top of a rounding error.

But that hasn't stopped Google's defenders from bringing up MPEG LA and its licensing fees as a primary reason behind this controversial decision. One of the clearest such statements I've read so far was from Brian Proffitt at ITworld, who titled his post "Chrome H.264 video decision a vaccination against license trap," with the subhead "Google promotes open, but also gets out of MPEG LA royalty trap."

H.264 can [be] expensive for software and hardware developers to license if it doesn't fall into this narrow line of use. MPEG LA, the keeper of the H.264 codec, told Mozilla to cough up $5 million to license H.264 in the Firefox browser--which is why there's no H.264 support in Firefox.

[...]

Google was looking down the road at millions of dollars in licensing fees and the possibility of never getting away from H.264, if it gets more widely deployed.

That sounds awful, unless you actually know what the MPEG LA licensing terms are. In his post, Proffitt talks at great length about royalties for distributors of video content. Those terms might apply to Google's YouTube subsidiary, but they do not apply to developers of software like Chrome.

I wrote about this at some length last year, and called those fears "greatly overblown." I just reread the MPEG LA licensing terms to confirm that my facts are accurate. Here's what's really going on:

  • MPEG LA charges consistent licensing fees to software developers. H.264 support in Google Chrome (for which Google currently has a license from MPEG LA) falls into the category of "branded encoder and decoder products sold both to end users and on an OEM basis for incorporation into personal computers but not part of an operating system."
  • For Google, the license fee is laughably smallProffitt tsk-tsks at "millions of dollars in licensing fees" as if it represents a burden. Oh really? Google hasn't yet reported its financials for 2010, but the combined profits for the four quarters ending on September 30, 2010 were $17.68 billion. The maximum annual license fee for a product like Chrome (or Firefox) is $6.5 million. By my calculation, that figure is less than 4/100 of 1% of Google's profits.
  • There's no royalty trap. The fear implicit in this entire argument is that when the H.264 license has to be renewed in 2016, MPEG LA will unconscionably raise those rates. If that fear were legitimate, would more than 800 companies, including Google, have already decided to license H.264? Maybe they actually read the license agreement, which specifies that "the License will be renewable for successive five-year periods for the life of any Portfolio patent on reasonable terms and conditions. ... [F]or the protection of licensees, royalty rates applicable to specific license grants or specific licensed products will not increase by more than ten percent (10%) at each renewal."


Update: I've reviewed the changes in the 2011-2015 MPEG LA licensing agreement and calculated how much Google and other companies might pay in royalties under these terms. For details, see A closer look at the costs (and fine print) of H.264 licenses.

In fact, by saving a few pennies now, Google might be walking into a much more vicious trap. Yes, it purchased the assets of On2 Technologies and released the formats (renaming VP8 to WebM incorporating VP8 into its newly branded WebM container format) and the underlying patent portfolio as open source. But Google's license for third parties to use those patents doesn't include any indemnification from patent infringement, as open-source patents expert Florian Mueller noted last year:

For WebM/VP8, there's a vague assurance by Google that its own patents, which are licensed on a royalty-free basis, are all you need. But Google doesn't publish a detailed analysis, nor do the license terms include indemnification. So it's pretty much a "trust us" story. I've seen opinions that agree with Google's view, and others who disagree. If Google offered indemnification, that would change the situation, but they don't.

Mueller's post goes into great detail about the continuity of MPEG LA licensing and is a must-read if you're interested in this topic.

As Mueller notes, AVC/H.264 is in extremely widespread use today. Any third parties that wanted to claim patent infringement would certainly have done so already. The same is emphatically not true for the patents underlying WebM, which have been obscure up till now but are about to be catapulted into the mainstream by a company with very deep pockets and very big ambitions.

My colleague Stephen Shankland at CNET spoke with Steven J. Henry, an intellectual property attorney at Wolf, Greenfield & Sacks, who warns of the risk that Google is taking. "A codec is like a mechanical device with hundreds of parts. Any one or more could be the subject of a patent," he told CNET. And patent holders may wait for years before "springing the trap."

Google clearly believes it can prevail in a long and potentially costly patent battle. The real question is whether any major allies will agree to join them or stay away to avoid becoming a co-defendant.

Topics: Google, Browser, Legal, Patents

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76 comments
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  • Evil

    It is pure dripping naked evil. It hurts HTML5. It shows Google can't be trusted to act in users interests. It show their "Don't be evil" is nothing but marketing spin.

    This REALLY hurts on mobile, where H.264 has hardware support. Now it has the be rendered with Flash. This is a bad thing, Adobe's Flash is a closed technology, it consumes a lot of resources (very bad on mobile) and does absolutely nothing to promote openness.

    So Flash is in Chrome and H.264 is out - there can be no justification for this that isn't just evil.

    "Bad Google!"
    jeremychappell
    • "Don't Be Evil"

      @jeremychappell

      Has been shown to be a marketing ploy for sometime now. Luckily, it's one people are not really buying into anymore, thanks to a few high profile privacy blunders.
      The one and only, Cylon Centurion
    • lay down the crack pipe

      @jeremychappell
      Google will set us free from the patent tirany.
      Linux Geek
      • You have to be able to spell "tyranny" first to be able to offer it.

        nt
        Joe_Raby
      • What Ed seems to be saying is that.......

        @Linux Geek

        the MPEG-LA protection racket may be better/cheaper than some other protection/extortion racket.

        Is that the tech world we want to live in?
        Economister
      • RE: By dropping H.264, is Google avoiding a trap or walking into one?

        @Linux Geek Err, "Flash" - ring any bells? Not least on Linux the performance of Flash is horrible.

        "Does it run on my Linux box?"

        Yes.

        "Is the performance OK?"

        Assuming the thing isn't running much else and I don't have much Flash running, it's okay.

        "Why the beef then?"

        My Linux box is a monster, and Flash makes it feel very ordinary. No other application on there delivers such disappointing performance. H.264 video runs well.
        jeremychappell
    • RE: By dropping H.264, is Google avoiding a trap or walking into one?

      @jeremychappell

      Yes. It's amazing how many people rally to support an advertising company.
      tonymcs@...
    • Guys, you don't use Chrome OR YouTube. Why do you even care.

      Just relax and let the big boys play chicken with each other. HTML5 will be a lot better off without H.264, it is a clunky codec, and, money aside, the licensing is a pain in the arse.
      DonnieBoy
      • RE: By dropping H.264, is Google avoiding a trap or walking into one?

        @DonnieBoy I use Chrome on Linux. I use YouTube (doesn't everybody?) H.264 is a lot better than Google's proposed "solution".

        What Google is doing is bad for users. Google know this. Google is being evil.
        jeremychappell
    • RE: By dropping H.264, is Google avoiding a trap or walking into one?

      @jeremychappell BAD ROBOT!
      AirmanChairman
  • RE: By dropping H.264, is Google avoiding a trap or walking into one?

    Hate to say it but as someone who is extremely loathed to agree with M$ shills here, Ed does bring up some valid points. Google just shot themselves in the foot and many now have still another reason to avoid Chrome.<br><br>And I don't believe Donnie on any of this. With Google, their "open" claim will turn out to have some kind of patent cost behind it now that Google has embraced their own format.<br><br>It wouldn't surprise me if Apple and M$ eventually team up on this issue.
    LTV10
    • RE: By dropping H.264, is Google avoiding a trap or walking into one?

      @LTV10 Team up on what issue? Google could goto MPEG-LA and pay the loyalty. It's purely Google's choice not to license the technology. Not to mention nobody really sure that the WebM/On2 technology is free of any patent issues.
      Samic
      • RE: By dropping H.264, is Google avoiding a trap or walking into one?

        And what's to prevent Google from pulling a fast one? The same thing some people here are accusing MPEG-LA of possibly doing?
        ahh so
      • RE: By dropping H.264, is Google avoiding a trap or walking into one?

        @Samic

        actually, Google already paid the MPEG-LA royalties for h.264
        erik.soderquist
      • RE: By dropping H.264, is Google avoiding a trap or walking into one?

        @erik.soderquist

        No. H.264 codec license fees are recurring.

        http://www.mpegla.com/main/programs/avc/Documents/AVC_TermsSummary.pdf
        rlawler
      • RE: By dropping H.264, is Google avoiding a trap or walking into one?

        @rlawler

        clarification: Google has already paid the current cycle of royalties, keeping support for it now and phasing it out as opposed to simply cutting it now doesn't change their immediate royalty bill until the next renewal
        erik.soderquist
  • Somebody get Ed Bott a big straw please.

    He's got nothing better to report about MS, apparently.
    Dietrich T. Schmitz, ~ Your Linux Advocate
    • what's the name of this blog again?? &quot;Ed Bott's [b]Microsoft[/b] Report&quot;

      @Dietrich T. Schmitz, Your Linux Advocate ...that's pretty funny.. they guy clicks on [b]THE Microsoft Report[/b] and is somehow surprised the find MS related subjects.. LMAO..
      doctorSpoc
    • You really never have anything interesting to say, yourself

      @Dietrich T. Schmitz, Your Linux Advocate

      Well, except for your usual "MS bad, Linux great" rhetoric, so what was your point there, again?
      John Zern
    • RE: By dropping H.264, is Google avoiding a trap or walking into one?

      @Dietrich T. Schmitz, Your Linux Advocate

      What's the matter Dietrich? Did you see Google as Star Trek and are disappointed they're actually Mad Men?

      In the end an advertising company is an advertising company. They're just naughty boys, not the Messiah.
      tonymcs@...