Because it has features that free applications, like Google Docs, doesn’t. Simple. Don’t get me wrong, Google Docs is great. I use it almost every day in my personal life. When I was a student myself I found that Word could do things for me that Docs could not. Like format a works-cited page or bibliography for me, correctly. It also tracks use of citations and can auto-update those citations throughout an entire document. No longer did I worry about correct format or anything else that my professors would penalize me for getting wrong.
I love showing this feature to students. The reaction I usually get is something like “Why didn’t anyone ever tell me about this”! Well, I’m telling you.
It’s so simple too.
Here is more info on the feature: https://support.office.com/en-us/article/add-a-citation-and-create-a-bibliography-17686589-4824-4940-9c69-342c289fa2a5.