Google committed a substantial act of charity on the first day of its annual I/O developers' conference in San Francisco this week, giving away a piece of intellectual property acquired just three months ago at a cost of more than $120 million.

Video play: Google's Vice President of Engineering Vic Gundotra introduced speaking at Google I/O. Credit: Flickr user pathawks CC BY-SA 2.0

The software, free for anyone to use or modify, may not sound particularly special. Called VP8, it is a video codec--software used to compress video for transfer online and decompress it for playback at the other end. Google acquired VP8 in February, when it bought a small New York company called On2.

However, this seemingly humble piece of code is being promoted by Google and a consortium of major software and hardware vendors as a crucial tool that will bring about a new wave of online innovation. Google combined VP8 with an existing open-source audio codec, called Vorbis, to create a new free video format called WebM. The new format is designed to complete the capabilities of HTML5, the latest version of the free and open code that underlies the Web.

"One of the core tenets of the Web is that it relies on open standards like HTML, TCP/IP, and JavaScipt," said Google's project management VP Sundar Pichai to an audience of more than 5,000 at the I/O conference on Wednesday. "It's great to see video get that option as well."

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