Google WebM uses VP8 video codec

Here's what Google has to say about the VP8 video codec in particular:

The team that created VP8 have been pioneers in video codec development for over a decade. VP8 delivers high quality video while efficiently adapting to the varying processing and bandwidth conditions found on today's broad range of web-connected devices. VP8's efficient bandwidth usage will mean lower serving costs for content publishers and high quality video for end-users. The codec's relative simplicity makes it easy to integrate into existing environments and requires less manual tuning to produce high quality results. These existing attributes and the rapid innovation we expect through the open-development process make VP8 well suited for the unique requirements of video on the web.

A healthy number of software and hardware makers are already backing WebM. The list includes Adobe, Microsoft, Mozilla, Opera, and Skype on the software front as well as ARM, Broadcom, Nvidia, Qualcomm, and Texas Instruments on the hardware side. According to Engadget, AMD and Imagination Technologies are also part of the fold.