“Microsoft’s ability to further expand Game Pass has been hampered by Sony’s desire to discourage such growth,” Microsoft said in the document. “Sony pays for ‘blocking rights’ to prevent developers from adding content to Game Pass and other competing subscription services.”
Maybe Sony pays exclusive rights to stream content on its own services, or maybe there are clauses in some streaming contracts that prevent games it publishes from being streamed on competing services.
Microsoft is trying to convince Brazil’s regulator CADE that the $68.7 billion acquisition of Activision Blizzard should happen, which Sony of course disagrees. It will be difficult for other developers to create a franchise rivaling Call of Duty (which Activision is developing), and one of the arguments against the deal cited above says it stands out “as a category of games in its own right.”