It'll more be that the Google docs "live editing" backends are expensive to use disk and memory wise. They store complete version history with each keystroke of a document.
There's a good chance a megabyte of "document" costs Google a gigabyte of internal storage...
They don't store a complete version history. It just uses checkpoints in their timeline of real-time edits and computes the differences when you need them. Those deltas can also be compressed.
There's a good chance a megabyte of "document" costs Google a gigabyte of internal storage...