The whole 'GamePass on PlayStation' is an interesting one.
Let's posit 2 things :
1. Microsoft wants GP to be on as many devices as possible to increase subscriber numbers.
2. Sony wants third party publishers to release games on their store and get a revenue cut of each transaction.
I think both those things are fairly self evident and reasonable.
Let's posit one last thing : They both want to maximize their gains (revenue/profit/marketshare/etc.)
So, why isn't GP on PS consoles?
From the PoV of MS :
If you natively port every single first party game to PS, and make a 'EA Play' type subscription, you effectively kill one of the reasons to get an Xbox, and basically become a third party publisher. Sony sells more consoles, gains more revenue. You might get more subscribers and revenue, but you transform your business from platform holder to publisher. You could still make consoles, but buying a PlayStation would simply be a better option because it gives you access to more games. You get ~70% of every sale instead of 100% from your store.
So what can MS do to maximize their gains?
Offer a GamePass PS4/PS5 app, like Netflix and Disney+, and offer your first party catalog through cloud streaming only.
But here's the catch : since it's a streaming app, and subscriptions and microtransactions don't go through PSN, you get to keep all, or most, of the revenue.
From the PoV of Sony :
Obviously you would be interested in having a publisher publish all their games on PSN and get the revenue cut from sales and microtransactions.
If their proposition is to instead make a streaming app, allowing them to bypass your store, then what is there to gain from that? You would most likely lose out on revenue spent on your store. These consoles aren't open platforms with a number of stores.
So I think it might be true that MS offered Sony to put GP on their consoles, but evidently the terms weren't mutually benefactory.
Even EA Play took like 5 years to arrive on PS consoles, so clearly there were things that needed to be worked out.
If MS offered a 'EA Play' type deal to Sony, they would accept in a heartbeat.
I don't think MS have any intention to get 'regular publisher' terms though.
It's the same reason Steam or the Epic Games Store doesn't allow GP either.