You can use Google Drive to create and store files. Files created in Google Drive, Google-format files, can be edited collaboratively. Files stored in Drive cannot (though you can use the Office Editing for Docs, Sheets & Slides Chrome extension to make basic edits in Chrome to Office files). 

To gain the features of Google Docs for your Office files, convert them:

• Convert an Office file to Docs, Sheets, or Slides

Convert Files Automatically on Upload

If you want to convert all uploaded files to Google format, change this setting:

1. Click on the settings gear in the top-right corner and select Settings
2. Check the box for Convert uploaded files to Google Docs editor format and click Done