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Tldr: Because Camera alone doesn't sell.

The Long answer. Adding a decent camera sensor also requires you market the crap out of it. And as shown by Huawei and Samsung, longer Zoom sells better than better sensor or image quality. For 90% of customers Flagship Smartphone Camera quality is good enough or fast approaching good enough. Zoom level makes lots of difference.

And that is assuming Sony's Smartphone overall are anywhere as good as its competitor such as Samsung and Huawei. I have no idea whether that is the case, but Sony's Smartphone sales are dismal in numbers. [1]

And finally, as far as I can tell, both Sony and Samsung are innovating like crazy to produce the best small sensor. There just isn't a super great small sensors sitting there waiting for others to pick up for additional $20 more. And if Sony decade to withhold those tech from Apple, Samsung will capture those market shares.

[1] If you look at overall annual shipment, Huawei, Samsung, Apple, Chinese Brands ( Xiaomi, Oppo, OnePlus, RealMe, Vivo etc.. ) They are 90+% of the market.