I can see the logic in Square-Enix sizing down to make themselves purchaseable for Sony, but I don't see why Sony would want to buy Square-Enix outright. Over the years S-E has been loyal to Sony and always open for moneyhats, and there's nothing on the horizon that indicates that this will change. Series like Final Fantasy and Kingdom Hearts don't sell much on Xbox in comparison to PS while they aren't coming to the Nintendo console by default, so the mere continuation of moneyhats for marketing rights and the like would be sufficient for Sony. The only thing of real value is Dragon Quest, because that IP does appear on Nintendo consoles. But that alone would not justify the baggage of other mismanaged games that Square-Enix brings with it.
With Sony banking hard on live service games in the foreseeable future (allegedly ten live service games planned for release by the end of 2025), they could be looking at the cash cow Final Fantasy XIV. That's how a Square-Enix purchase could fit into Sony's overall strategy and it's something that is commonly overlooked on a forum like this where there are barely any MMORPG fans. I didn't think of this angle either, it only came to me after I had almost finished my first paragraph.
Games-wise, a Square-Enix purchase by Sony wouldn't change all that much. The PC would continue to get games because Sony is looking more into that space already anyway. The Xbox playerbase hasn't shown enough interest in S-E titles to conclude that it would be a big loss for the Xbox library. The only significant damage would be that Nintendo loses out on Dragon Quest and a few minor titles in a future, but at least for the minor titles it's possible that some S-E staff leaves studios to form a new one that works together with Nintendo; that's something that has happened before, so it can happen again.
In any case, Square-Enix being bought by Sony wouldn't be as earth-shattering as Microsoft buying Bethesda and Activision-Blizzard, because S-E is already most prominent in sales on PS. I give this 50/50 odds of happening, because in the current age of inflation big companies feel inclined to spend money on assets even more than usual.
FFXIV was actually the first thing to pop in my head, as it is far and away SE's biggest title, and it seems to fit into Sony's new approach on GaaS/MP games. Guess I don't qualify since I'm one of the few big FFXIV fans 'round here :P
But I'm of the opinion that FFXIV is about to reach its peak if it hadn't already. It's essentially a downgraded PS3 MMO, the visual upgrades its receiving soon will not mask its inherent flaws. Pretty crazy to me that it's still going strong.
Moneyhatting is kinda all the more reason for Sony to acquire SquareEnix. It shows how much they still care about their content. Rather than moneyhatting them for say a dozen titles over the generation, why not acquire them and make the money back through the new added revenue stream? Constant moneyhatting is shortsighted if you got the resources to buy the entire company, which is pretty much a gigantic moneyhat in anything but name, efficiency, and control. They'd retain the option to sell them later down the road if things didn't go as well as they hoped.
They can choose to keep everything exactly as it is and still benefit greatly in the long run. And... they can choose to make more games exclusive to push console sales when production exceeds demand. Having complete control and 100% the revenue streams is more effective than moneyhatting. To top it off, there is always the threat of another platform holder buying them, or the SE management pulling a Konami.
But yeah, it's certainly nowhere near the level of Zenimax acquisition as far as pushing console sales, let alone Activison Blizzard. Didn't really calculate it in mind but I'd argue that removing Bethesda's games off Playstation may affect more PS players than removing ALL Capcom/SquareEnix/FromSoftware (okay maybe not Elden Ring) games combined from Xbox would affect Xbox players. So yes, it'd be a pretty tame acquisition in that sense.