No they are using XML, they are most certainly not using ODF. A list of applications that do implement ODF can bee seen Here
"The OpenDocument specification is available for free download and use. The specification is licensable under reciprocal, royalty-free terms by any party. Reciprocal, royalty-free licensing terms are being promoted by some standards developing organizations, such as the W3C and OASIS, as a method for avoiding conflict over intellectual property concerns while still promoting innovation. In short, anyone can implement OpenDocument, without restraint, and as shown below both proprietary and open source software programs implement the format."
All of this is in contrast with the competing "Microsoft Office Open XML" developed by Microsoft. Microsoft has released their format royalty-free, but with additional conditions not imposed by OpenDocument. Independent analysts have stated that Microsoft's licensing requirements will prevent many competitors from ever implementing Microsoft's format. The extent of this incompatibility is the source of significant controversy between Microsoft and other parties. The text below attempts to capture these differences, since they are often one of the reasons people consider using OpenDocument.
"Groklaw posted a legal analysis by Marbux, a retired lawyer, whose detailed analysis found that Microsoft's specification excluded competition, in contast with Microsoft's public claims. "Competitors are... effectively precluded from bidding against Microsoft or its suppliers for any... contract specifying use of Microsoft's software file formats." He first noted that the patent license for the format "is structured to be read restrictively, in Microsoft's favor... it states that: 'All rights not expressly granted in this license are reserved by Microsoft. No additional rights are granted by implication or estoppel or otherwise.' This is not the customary 'all rights reserved' phrase more commonly encountered... If you cannot find words in the license explicitly stating that you have the right to do something, you don't get that right." Then, by examining the patent license in detail, he found a number of ommissions and conditions that suppress competition: there is no integration clause, no license for the schemas themselves, no grant of copyright was included in the patent license, no commitment to delivering any future changes to the schemas or right to develop software implementing them under the same or more liberal license (this particular issue may have been resolved later by Microsoft), no identification of the Microsoft patents involved, no identification of third-party patents, no right to sell or sublicense implementing software, a prohibition against sale and licensing of implementing software, a prohibition against software having functions other than to read and write files using the specification without modification, no license to convert files to and from other formats, no right to write files using the schemas, vagueness and ambiguities will deter implementation by developers and adoption by end users, and a discriminatory incompatibility with F/OSS licensing, and discriminatory incompatibility with proprietary software competitors. In short, he believes Microsoft's license prohibits effective competition from using the format."
LOL, like anyone with a brain believes what Jokelaw has trotted out by some supposed lawyer who probably doesn't even exist. Find a respectable firm saying anything close to that, and it might dignify a response.
According to the announcement that came out this past week, Office 12 is supposed to be using ODF.
Paul