I think the first place to start is to quickly dispel a common myth I've heard a lot over the years. Some people seem to think that the file formats have some special importance in some kind of competition. It's just not true; at least it hasn't been true for a long time. You have to remember the Microsoft first started developing Office over 20 years ago. At the time, the binary formats were the state of the art. They were fast, small and optimized to take advantage of the feature set of the product. At the same time, they were brittle and not very good if you wanted to reuse the data in the document or attempt some kind of interop with another program. These limitations weren't intentional -- that was just the state of the technology..Read on over here.
Why XML is the default format in Office 12
Posted on Monday, October 03 2005 @ 8:35 CEST by Thomas De Maesschalck
Brian Jones has posted a quite long text on his MSDN blog which explains why they chose the XML format as the default in Office 12.