Microsoft has/had an enormous advantage because of the large market share of Microsoft Office and its proprietary document format, since anyone not using Microsoft Office will not be able to read documents from the majority of people who use Microsoft Office.

Why the government doesn’t like it
Storing information in a proprietary document format owned by a company has problems such as, it is hard for anyone not using software by that company to view the documents and what if the company goes bankrupt?
Software does not age, but it does in a sense have to adapt or it will become obsolete, if newly discovered bugs are no longer fixed or new features are no longer added the software becomes less useful.
An open standard for office document means anyone can write software which reads documents stored in this format, even if the company supplying the software the goes bankrupt, the documents can be used by other programs implementing this standard or the government can even pay a company to write a program which reads the documents.

So why isn’t OOXML a good thing?

1. It seems Microsoft is not willing to give up its advantage of vendor lock in just yet, so their “open” standard includes definitions such as: “truncateFontHeightsLikeWP6″ or “autospacelikeword96″, these are not actually definitions but just point to a proprietary format. This will prevent anyone from properly implementing OOXML, because no one, except maybe Microsoft, knows what “autospacelikeword96″ means.
2. There already is an Open standard for office documents, called Open Document Format, this standard is actually properly formulated.
3. There is no implementation of OOXML, the latest version of Microsoft Office implements a different version of OOXML, which makes he entire standard even more dubious
4. Technical errors in the standard which allow for different interpretations, such as with dates where according to the standard 5 different types of dates are accepted which might lead to incompatibility issues
5. Many more reasons can be found as to why OOXML is not a good open standard, but these are enough for me!

Now the ISO gets involved
Governments specified open standard as an ISO(International Standards Organization) approved standard, so Microsoft had to get OOXML approved by the ISO. To become an approved ISO standard two thirds of the ISO member countries have to vote in favor of the standard.
Achieving consensus per country has turned into a real circus, each country puts forth a vote through its own standards organization, these all have members which they mostly let cast a vote to come to the countries vote.
Members of some countries standards organizations didn’t get full options though, they could for example only vote in favor of approving OOXML or abstain, in some countries all of a sudden many Microsoft partners signed up to become a member of the countries standards organization and in others the voting in the countries organization was ignored in countries final vote. In Norway 21 members voted no and only two voted to approve (Microsoft and a business partner of Microsoft, Statoilhydro), but Norway voted for approval anyway. In Germany members could only vote yes or abstain, it ended in a tie, 6 abstain and 6 approve, so Germany votes to approve OOXML, even though there was no consensus (and no proper vote).

Democracy versus common sense
In a lot of countries this voting process was the point of discussion, but from Brazil came a different message. They voted no based on technical details of the OOXML standard and called out to other countries to not rely on a voting process but judge the standard on its technical merits to come to a conclusion as a whole.
So why is it that the voting failed?
Is it as easy as just judging the standard?
Probably not in every country, but it is weird so many countries and are approving a standard which has no implementations and is no better then an existing standard.

Conclusion
OOXML has probably been approved as an ISO standard at the moment (it will be announced today), the general response among the more technically adapt is that this is a devaluation of the ISO, but the positive side of the whole mess is more people are aware of open standards, proprietary standards and vendor lock in.