Honestly, I do not know much of the Final Fantasy series, and I hope that does not scare you from what I'm about to say, so listen up;
I could see the potential negotiation being intended to be for Geno, in the first place.
We know that Sakurai has been wanting Geno ever since Brawl, but for some reason or another it has never come to be. We got Snake, and we got Sonic, who delayed the final product, but it was the introduction to third parties in Smash.
Then comes Smash 4, and other companies took notice of this, and asked (some even begged) for their characters to be in the game. Not only fans themselves, but the companies. Capcom: Mega Man (from the start) and Ryu for DLC. Platinum: Bayonetta through the Ballot. Bamco: Pac-Man (from the start), and this would be the second time Square would have been contacted by Sakurai, with another attempt at something regarding, perhaps Geno?
Square, knowing this, seeing how other companies benefitted from having a character that "sells" being in the Nintendo party fighter could have been a good idea. It seems at that point that if they were going to agree to let any of their property even get into the Nintendo game, it would be a character that sells.
Square knowing that they are working on the FF7 Remake would most likely rather have Cloud (or at LEAST a Final Fantasy property) get into the game instead of a one-game-appearence blue wooden doll they never touched again. Still, by negotiation, Sakurai not only finally managed to get Geno in Smash (this time just as a Mii costume, but LEGIT GENO content in Smash), while also with intention (or not), making Link VS Cloud fans very happy. I know a lot of people got happy about Final Fantasy being in Smash. It's a series that sells, and Square knew this.
Now, with the next game. I'm sure Square have seen that Cloud in Smash was great, and that perhaps, yes, perhaps this time Geno would be coming inn a playable form, as the DLC for Cloud was a success.
For, if Geno were to be in Smash, it would have to be on the base game. Would Geno sell as much as Cloud? Or any other Final Fantasy protagonist? Who knows, it would have been an unsafe gamble by Square, and therefore letting Sakurai use it as a Mii costume to test if Geno still holds any water with fans of Nintendo.
Not only do I think Cloud will be coming back, but I believe this will be the best, and perhaps only stable chance Geno will have to make comeback.
But hey, that's just a theory, a SMASH THEORY ...