It's actually been a long standing trend since the start of the PS3/Xbox360 generation. Iirc Sega had to merge with Sammy to weather the storm. Especially after losing so much money in the previous generation on the Dreamcast.
In that period, the Japanese videogame market shrunk a great deal, and many Japanese developers either went out of business, merged, or courted western publishers.
PS5 is really hard to buy in Japan, maybe same as all other countries. The rumor is that SIE reduced selling units for Japan and increased for US/EU. It seems reasonable because anyway Japanese non-core gamers won't buy Xbox Series S/X.
Actually, PS4 launch in Japan was delayed 3 month from US/EU so the PS5 situation is a bit improved, but still complained.
Another complain for PS5 (and SIE US) is that they changed ○/×/△/□ button meaning. Previously ○ was assigned to OK and × was Cancel that's opposite to foreign edition. Now on PS5, its assignment is same as foreign edition but it feels very strange use of symbol for almost all Japanese people. It should be PSX's initial design failure.
In that period, the Japanese videogame market shrunk a great deal, and many Japanese developers either went out of business, merged, or courted western publishers.
https://www.gamasutra.com/view/news/222192/Japans_console_ga...
So I wouldn't have thought a Microsoft takeover attempt would have truly been laughed out the room at that time.
But Nintendo are a very unique company. Much like Ferrari in Italy.
Very few brands in the world like it. They would have found willing backers that cherished their independence.