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I think the point is that if you have relatively complex data being returned, and relatively complex data being parsed, its easier to absorb the cost on the hardware side than the development side.
Sticking to XML when you can afford to makes it easier to validate common logic between different languages (think C, C++) .. if you have diff data formats, and diff parsers, and diff developers working on them, you're bound to have more problems than if you data feed is built from a consistant, human readable format. Sure, XML is expensive, but thats the whole concept of data abstraction.
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