They arent.
There is making games like sony, then there is competing with others.
As of now, xbox has their own games and projects. They have no reason to compete with sony. Especially when sony is putting their games on pc.
Xbox needs to focus on their internal studios, build their vault, and expand their reachable market.
Sony still is struggling with their mega blockbuster games. 20M gow, a big franchise, which had 4 years, and price decrease permanently, lost to animal crossing. That game had 1 year to hit 30+m copies sold in 1 year. Especially GOW having 120+m? ps4 consoles and 10m+ ps5 consoles as of now.
They need wider market. Consoles are garden project. Just look at gow pc now. it hit top 3 preorder games on steam.
No matter how good your games is, you need people to be interested in.
Its why fifa, COD, gtav, skyrim, and the witcher 3 are big games. They have players all around the systems.