Google's issue with h.264 is that they are not part of MPEG LA. They don't have a say on licensing fees or terms and as result it becomes theoretically possible for the companies part of MPEG LA (amongst which are Apple and Microsoft, direct competitors to Google) to fuck'em over. That happening is extremely unlikely, if not outright impossible, but google could be playing it extra safe.

How will this pan out I have no idea, but the closest thing to a resolution that I see is Google will try to make MPEG adopt VP8 or the whole WebM in some way and join MPEG LA.

Of course they could be hoping to fight the patent allegations and not lose, but I doubt that Google have become so carelessly cocky.