It is a different industry today compared to 20-25 years ago in terms of marketshare.
Striking 3rd party exclusive deals w/ Sony back then was a no-brainer because PlayStation was head and shoulders above everyone else in the marketplace. The PS1 and PS2 owned a whopping 71% and 74% of the console market share respectively. If you want to extend it towards the handhelds, the closest competitors to the PS1 and PS2 were the Game Boy line and the hardware and spec gap between the Game Boy line and the PS1/PS2 was SIGNIFICANTLY HIGHER and more noticeable than the gap between the Switch and the PS4/PS5 and Xbox One/Xbox Series. To the point where they were different branches of the same market, if not different markets altogether.
Now? Not so much. The gap has shrunken so considerably that w/ the right effort and staff, you can have a perfectly functional and playable Switch version of 3rd party games to release alongside its PS/XB counterparts, even the PS5 and Xbox Series, and it will sell decently because the Switch's hybrid/portable factor is a big enough reason to set itself apart from the beefier PS/XB versions that run better. You don't even need top of the line staff to pull all kinds of fancy software development or crunching tricks to get it running well. Just as long as they don't phone it in and treat it seriously, the Switch versions of these games will run just fine.
Performance vs. Portability is a genuine topic of interest and discussion when it comes to consumers' tastes. It's not like before w/ the GameCube, Wii, and Wii U versions of those games' respective PS/XB consoles (PS2, PS3, PS4, Xbox, 360, XOne), where you were getting the inferior version in every way, no ifs, ands, or buts about it. The Switch may still be technically and graphically inferior, but the one thing it offers that the other versions cannot is a VERY big thing -
ESPECIALLY in Japan, where it is THE thing.
In the case of Final Fantasy case, Square might have been able to get away with it before because back then, Sony was the clearcut market leader in every aspect. Even the PS2 ended up outselling the GBA and if you want to split the OG Game Boy and the GBC, the PS1 ended up outselling the GBC. Sony had such a huge advantage, they could even outright pressure devs into developing games exclusively for PlayStation or not develop them at all if they wanted too. Which back then would've been business suicide for a lot of these smaller 3rd party/indie devs. But for Square, this was not really that big of a deal because Sony was the market leader, and back then, they had a MUCH better working relationship w/ them than Microsoft, who had just entered the market and they had to build that relationship from scratch, and especially Nintendo, where THOSE relations were still sour from their exit from the N64 during FF7's development.
But now? The game has changed drastically. the Square/Nintendo relationship has SIGNIFICANTLY improved. To the point where it is almost like that beef never happened and they have been good buddies this whole time. They get along very well w/ Microsoft too. And Sony's market share is nowhere close to what it was back then, ESPECIALLY in Japan where Nintendo just rules the market w/ an iron fist. So those exclusive deals that were very beneficial for Square Enix and others back then? They are not so beneficial anymore. In fact, they do more harm than good. That is why you see more and more 3rd party games that used to be PlayStation exclusive back in the PS2-PS3 and even PS4 days, are now going multiplatform. And if Square Enix wants to give Final Fantasy a real shot in the arm, especially in their home country, they better do the same.