They literally did. XLS was proprietary until Microsoft completely cornered the spreadsheet software market.
In fairness to Microsoft, when the XLS file format was first defined about 40 years ago all of their competitors also used proprietary file formats. Back then open file formats for complex, structured data weren't really a thing. I suppose in theory they could have used SGML but that wouldn't have been very practical given the severely limited hardware resources at the time.
People should not use proprietary formats for obvious reasons, but XLS has been largely reverse engineered.
They very much do not, you can import/export in pretty much any format you want and they've got a well documented sdk.