Although Microsoft is going to support the native playback of videos for it's Internet Explorer web browser, it will only allow the H.264 web video encoding format and not more "open" alternatives.
The Worldwide Web Consortium (W3C) decided to not make a recommendation for a specific web video technology, leaving web browser designers to fight over which standards they will use (or in this case, fail to agree upon). Mozilla and Opera are supporting Ogg Theora and Google. Apple and Microsoft are supporting H.264.
A concern for H.264:
Many in the industry have concerns for the widespread adoption of H.264 because there are issues with patents and licensing, which prevents it from being freely used. Both Apple and Microsoft are patent holders in the H.264 patent pool.
Background on H.264:
H.264 (MPEG-4) (Advanced Video Coding) is a standard for video compression. H.264 is a block-oriented motion-compensation-based codec standard. It was developed by the ITU-T Video Coding Experts Group (VCEG) together with the ISO/IEC Moving Picture Experts Group (MPEG)