Plus, Sharepoint still has no concept of concurrent editing, so you better hope that nobody works on the same document at the same time. Also, it doesn't track changes.
It is only better than a file on a Windows share by a hair. A very thin hair.
Word's diff is Not Great (tm), but yes, at least it's there. Have you tried using it with more than 1 other changeset?
I share a lot of your sentiment about open formats in previous comments, but this is classic FUD and demonstrably wrong.
No change tracking is visible to me, other than a timestamp and name of last edited.
FUD is isn't. Please don't use buzzword gratuitously, I know _a lot_ more about the deployment here than you. Also, you didn't counter the statement that it doesn't do concurrent editing (like Google Docs, OnlyOffice), which in 2024 is a major gap imho.
As for concurrency, read my comment again, I use the specific word.
What did you do to have concurrent editing (or what did you not do), and how does it integrate the various diffs?