This is very very very old. Yamauchi told Square that if they went to PlayStation to never come back. How'd that turn out? Yamauchi vs Kuratagi: who was the biggest maniac?
Yamauchi did extend an olive branch to Square in the mid 00s by investing money in a Square shell corporation, Game Designer Studio, which got FF Crystal Chronicles released on the Gamecube, published by Nintendo. Pretty sure the Square Enix merger helped too. Nintendo always had a better relationship with Enix than Square. Even now, Nintendo tends to favor Dragon Quest over Final Fantasy.
Square, meanwhile, built the PS1 and then collapsed under its own weight in a few short years, especially after their disastrous foray into movie-making. :(