If they were using this compression for storage on the cache layer, it could allow more videos closer to where they serve them, but they decide the. Back to webm or whatever before sending them to the client.
I don't think that's actually what's up, but I don't think it's completely ruled out either.
That doesn't sound worth it, storage is cheap, encoding videos is expensive, caching videos in a more compact form but having to rapidly re-encode them into a different codec every single time they're requested would be ungodly expensive.
The law of entropy appears true of TikToks and Shorts. It would make sense to take advantage of this. That is to say, the content becomes so generic that it merges into one.
I don't think that's actually what's up, but I don't think it's completely ruled out either.