That's all fine and well for Google and their endless buckets of cash, but what about other companies, or importantly startups who want to get into the game.
H.264 is a standard; not a de-facto, or "industry" standard, but one adopted by an international standards body with wide representation. It publishes specs. If you build a part to do something with H.264 video, as long as it conforms to spec, it will work with others' products. You know, like the way any unlocked GSM phone works on any GSM network that operates on the same frequency band. It's ideal for startups, because you only need expertise in your own narrow product field, not in the entire much broader space. To build say an innovative silicon decoder you don't need to know how to build an encoder, because the elementary stream conforms to the standard. You don't need to know whether it came off a disc or ethernet. And while you occasionally run into interop issues this is positively nothing compared to the alternative of having inhouse expertise for *everything*. Not to mention the cost of dealing with some hacker who thinks they're doing something smart in the encoder, blowing up your taped-out decoder you've sent off to fab!
Compared to other costs, licensing fees are fairly trivial. $100k doesn't even buy a competent engineer for a year.
H.264 is a standard and that means a lot! Google is sounding childish in its own wonderland of a world of openness without understanding what an international standard entails.