This is a concern some in my organization have related to eDiscovery. It seems that otherwise someone who wanted to hide something could just replace the content of the file with gibberish, since any searches would be run only on the current version and wouldn't catch the content.
This may be a moot point depending on the answer to the above, but assuming previous versions are searchable, I have another question. This page indicates that only a limited number of versions are available for a given file, unless you have an Elite account type:
Past the limits for each account type, my understanding is that older versions are not recoverable (please correct if I am wrong about this). Will those older versions still come up in a search? Even if search gets previous versions, if it doesn't get previous versions past the save limit for your account type a user could modify the file repeatedly until the version with meaningful content was lost. As a specific example, if a user in a Business/Business Plus tenant modified one of their files which originally contained the word "puppy" so that it was gibberish, then modified it 51 times, would the admins be able to find this file in an eDiscovery search for "puppy"?