I've put a question mark there since this story currently does not cite any named sources, but NewTeeVee certainly seems convinced that Google will open source the VP8 codec, and will announce this at their upcoming Google I/O conference next month. The VP8 codec, developed by On2 which Google recently acquired, is a high quality video codec which supersedes VP6 (one of the most popular Flash codecs alongside H.264) as well as VP7 (used by Skype).
According to NewTeeVee, the aim of this exercise is to equip HTML5 with a decent and open video codec since the HTML5 specs make no recommendations for a specific codec and the playback compatibility of specific video codecs varies greatly between those browsers which support the HTML5 draft specs. The biggest hurdle right now being the inconsistent support of Ogg Theora, a codec which - whilst 'open' - many deem inferior to industry standards such as H.264 and VP6, as well as H.264 which Mozilla FireFox does not and most likely will never support.
The opening of VP8 codec would be very welcome by many, and Flash could also benefit from this. I'm not sure how processor intensive the *encoding* to VP8 is, but Flash is in desperate need of a higher quality codec for live encoding than the now ancient Sorenson Spark, the only codec available in Flash for encoding from webcams. On the playback side, VP8 is also rated very highly, and I would hope to see support for it added to Flash if Google indeed opens it up. But even then we will have to see under what license they open source it, and whether or not any strings will be attached.
There could be some other stumbling blocks along the way, one of which may include potential patent issues, similar to those cited for Ogg Theora. It's really only once Google opens the codec's sources that patent holders such as those managed via MPEG-LA will be able to inspect VP8 for potential patent infringements. And I predict that we'll see hopeless claims from patent trolls popping up too, as is always the case in such situations. So patent licensing issue could delay a quick and wide rollout of VP8, and I won't be holding my breath just yet as many parties will see this as an opportunity to try and squeeze Google for some cash.
Another issue which is also mentioned in the comments at NewTeeVee, is the current lack of hardware supported decoding of VP8. H.264 has come a long way and can be hardware accelerated on many platforms, including many mobile devices. It will take some time for this to happen for VP8, if at all. I predict that this codec will have to prove itself first inside the browser before being adopted more widely.