From 2005: The Real Reason Behind MSFT vs Mass.
Since Massachusetts decided that Microsoft's proposed file formats did not meet the needs of their state, there has been an ongoing dispute. First of all, it was derided as mandating the use of OpenOffice.org, when all players in the drama knew that the state would purchase something with a proprietary license (such as Microsoft Office or Sun's StarOffice). Like any large enterprise, they are going to pay for a supported product. In that way, if a problem suddenly arises, they get on the phone and the vendor helps solve things, sometimes with a patch. It was also seen as an anti-Microsoft move, when in fact, Microsoft could easily implement ODF as fully-native file formats in their product. If they did so, they could have quickly and easily had first place on the approved vendor list.
In this SearchOpenSource article from 2005, Bernard Golden goes into some of the more manipulative tactics that were used to attempt to delay and derail the state's file format conversion.
With respect to the first two arguments, Microsoft is going to have some very angry ex-allies when they become aware that there is a significant difference between application and output, and that mandating an output format has nothing to do with the application creating the output. Nothing irritates a political player more than finding out that he or she has been taken advantage of for someone else’s agenda. In any case, these two arguments are just cover for the real issue Microsoft has, which revolves around the third issue: control of file formats.