Massachusetts' "Information Domain" document, the controversial IT software decision that seems as though it should have come from the budget department of a startup company rather than from a municipal government, has reached its comment period. The document lays the ground rules for all information produced by agencies of that state and could, if accepted in its current format, be a thorn in Microsoft's (NASDAQ:MSFT) side.

The rule would mandate that all information generated at the state level be stored in the OpenDocument format using the commonly accepted and widely available XML open source standard. Files created and stored with Microsoft's Office product suite do not currently meet this requirement.

For Microsoft, this could certainly be an annoyance, but it's hardly a death blow. If media reports are any indication, Massachusetts has an annual IT budget of about $100 million, of which a "substantial portion" is spent on software. Even if we assume that a quarter of this "substantial portion" is spent on Microsoft products (and that's highly unlikely, anyway), it would amount to only $25 million -- less than 0.1% of Microsoft's fiscal 2005 revenues of $39.8 billion.

Massachusetts, though, may not be the end of the story. Federal agencies in France, Germany, and China have already opted for open standards. And a change in Massachusetts will affect not only state agencies but also those that do business with them.

The companies that stand to benefit from these open format policies are Sun Microsystems (NASDAQ:SUNW), with its StarOffice Suite of products, and Adobe (NASDAQ:ADBE). For Microsoft, that makes the drama in Massachusetts a development worth watching.

Fool contributor Francois Olivier does not have a position in any of the stocks mentioned here.