A new client-facing encoding scheme would break utilization of hardware encoders, which in turn slows down everyone's experience, chews through battery life, etc. They won't serve it that way - there's no support in the field for it.

It looks like they're compressing the data before it gets further processed with the traditional suite of video codecs. They're relying on the traditional codecs to serve, but running some internal first pass to further compress the data they have to store.