Fun fact! Sony wanted to screw over Nintendo not because they were screwed over by Nintendo, but because they were humiliated by Nintendo.

Sony was trying to screw Nintendo over in the first place, Nintendo realized it, pulled out, and Sony threw a hissy fit.

The tl;dr: is that Sony basically wanted distribution rights for IPs that were published on CDs. Nintendo initially thought Sony meant as in 'we want to be able to distribute stuff published on CDs' which makes sense... but Nintendo's lawyers realized at the last second that Sony meant 'Anything that is published on CD, we now own that IP's distribution rights entirely'

As in, if a Zelda game was ever published on CD, Nintendo literally could not ever publish a Zelda game without Sony's approval. Defacto ownership of the Zelda IP, though not actual ownership.

Considering Nintendo was literally currently dealing with Sony extorting them over the dev kits for the Sony sound chip in the SNES, Nintendo very wisely walked away from that, and pivoted to Philips. (Sony and Philips jointly created the CD standard.)

While the CD-I was obviously a failure, this whole thing was a MASSIVE embarrassment to Sony, because they had already been doing the industry equivalent of bragging about the deal (which they shouldn't have been, because it wasn't finalized yet). Them yapping about it is also how Nintendo's lawyers realized that Sony was basically trying to do a hostile takeover of all of Nintendo's IPs. Needless to say, Nintendo was (rightly, imo) pissed.

And then Sony had the gall to complain about Nintendo like THEY were the bad guys, setting a narrative for years.