Generally, Hollywood has won.
(The Veto Club and Bar is located on Hollywood Road in beautiful Hong Kong. I would love to be seen there one day. This is their logo.)
The content industries have also turned peer-to-peer technology into the "porn" of tech. While it's a more efficient way to distribute files, Hollywood has branded it a natural copyright thief, associated it with all the world's evils, and caused most corporate and school networks to shut it off.
When Hollywood felt threatened by new technology Washington has even, in the past, sought to criminalize "attempted" violations of the DMCA. The whole "net neutrality" debate is really about perceived peer-to-peer threats to copyright.
Over the years Apple and Microsoft made themselves allies of the content industries, enforcing Digital Rights Management (DRM) and accepting the Hollywood Veto over their technology in order to take over distribution channels. The alliance has sometimes been uneasy.
Google's WebM, launched at Google I/O yesterday, is the first direct challenge to the Veto launched by a tech company in a decade. The open source, royalty free codec formerly known as VP8 has been met by a full-on FUD attack, but rather than back down Google has pushed forward.
For Internet advocates this is a matter of principle. W3C standards have always been royalty free, patent rights waived, in order to assure maximum penetration of the global market.
The H.264 codec does not meet this test, but Apple, Microsoft, Adobe and the rest of the industry was prepared to make it part of the HTML5 standard, a proprietary technology controlled by MPEG LA, in the name of maintaining peace with the content industries.
Google has played its cards carefully within the industry. Could WebM lose out to Flash? Adobe supports it. Hasn't Microsoft rejected VP8 in favor of H.264 support in IE9? Microsoft says it's not opposed to WebM.
The problem is this is a political issue, not a corporate issue. Google may be able to maneuver most tech corporations behind it (Apple has been silent so far), but Hollywood's tech veto is based in Washington, and I believe they have not yet begun to fight.
What is at stake, in the end, is control of content. Must that control be embedded in base Web technology? Will the Hollywood Veto be maintained?