Good point (embrace, extend, extinguish), but if they try I doubt they could compete with Google on Blink development here.

It isn't competing with Google on Blink development, it's simply adding support for the new JPEG image standard (which they're probably going to have as a system codec anyway in that case). Note that they've had HEVC playback support in Edge before Chrome.

They could just maintain it as a patch, so the development cost would not be too high.