FTC makes console market without Switch
(archive.vn)
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I don't think backing out of the deal was bad form. Sega did the same math and came to the same conclusion apparently. I just did a little bit of research, and it was about royalties for the games put on the discs. I guess Sony wanted too much.
I take issue with how they did it. Telling Sony you're going to make an announcement about your partnership and unveil your new console at CES (not E3, which apparently didn't exist yet), and then instead announcing a partnership with their competitor Phillips is unprofessional.
That's the official statement, but not the reason why they did what they did.