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Google dropping H.264 support in Chrome. Big Mistake?

From the 'Disambiguation:open' files:

Google is dropping support for the near ubiquitous H.264 video code in Chrome.

That's right folks, you'll have to choose your platform based on what content you want to use. If you want Flash you can't run Apple iOS and if you want H.264 forget about Chrome.

That's nuts.

Google Product Manager that Chrome's HTML5 <video>
support will be limited to the new WebM (VP8)
and open source Theora video codecs.
"Though H.264 plays an important
role in video, as our goal is to enable open innovation, support for the
codec will be removed and our resources directed towards completely
open codec technologies," Jazayeri wrote.

This makes no sense to me as it will create a content divide for users, while providing additional complexity and frustration for developers. Apple and Microsoft in one corner versus Google and Mozilla in the other?

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