Not true at all. Some of Microsoft's best minds created
extremely ingenious methods that allowed early word processors to be usable on files that were dramatically larger than what would fit in memory. OSes didn't support suitable performance via VM infrastructure at the time. It was clever, outside of the box thinking that got MS to be able to beat WordPerfect (a worthy competitor) and the many other also-rans.
There was (contrary to popular belief) not a deliberate strategy to limit interoperability. It was simply the reality of the approaches utilized that made them tightly coupled to the MS Word codebase and less standardizable than would have otherwise been ideal.
Source: one of the guys who worked on it at MS.