Live document collaboration is supported for Modern format Office files (DOCX, XLSX and PPTX). 
Sharing for document collaboration
To establish a live document collaboration with other users, the file(s) must be shared with Editor or Full permissions:

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 Opening and editing documents
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 Editing a document is initiated by selecting it and then pressing [Edit]:

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 The Office editor is suitable for typical document editing activities:

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 Audit and versioning
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 File editing events are logged in the fileβs audit every time a user who has made changes to a file exits the editor:

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 File versions are also captured every 10 seconds of idle time after a user makes a change and has the editor open:

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 The audit log and file history can be access via the details panel:

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