If H.264 support is being removed to “enable open innovation”, will Flash Player support be dropped as well? If not, why?
The premise is that openness is all or nothing. But Google can support Flash and work towards openness, just as Apple can prefer open web standards in lieu of Flash while supporting proprietary systems. There's no hypocrisy or conflict.
Android currently supports H.264. Will this support be removed from Android?
Maybe in the future. WebM support is new in Android, hardware decoders are really just coming to market, and there are enough existing and in-production phones that rely on H.264. The constraints placed on Google by the handful of Chrome users leveraging H.264 HTML5 video is completely unlike the realities of dealing in the handset market.
YouTube uses H.264 to encode video. Presumably, YouTube will be re-encoding its entire library using WebM. When this happens, will YouTube’s support for H.264 be dropped, to “enable open innovation”?
YouTube continues to support other proprietary formats. As with Sorenson, they're not going to drop H.264 until they don't care about the market share of H.264-only devices. In the meantime, they will try to drive people towards WebM in support of "open innovation". This is not inconsistent or even new.
Do you expect companies like Netflix, Amazon, Vimeo, Major League Baseball, and anyone else who currently streams H.264 to dual-encode all of their video using WebM?
It should be obvious that Google's hope is anyone using HTML5 video will eventually move to WebM exclusively.
If not, how will Chrome users watch this content other than by resorting to Flash Player’s support for H.264 playback?
Content producers won't care if Chrome users end up in Flash, since the content's still available and very few non-mobile users are getting HTML5 video anyway. Flash is still the norm outside of mobile devices.
Who is happy about this?
Were people ecstatic that Chrome supported H.264? Most people simply don't care about this kind of stuff and for good reason.