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The Brazilian referee ruled the whole of the ball had not crossed the line and did not review the incident with the Video Assistant Referee.
Since lifting their fourth World Cup trophy in 2006, they have not played a knockout game in the showpiece event, having only won one group stage match at the finals in that time.
Peru (21 points), Colombia (20) and Chile (19) will now vie for fifth place and a play-off spot against a team from the Asian Football Confederation.
Aleksandar Trajkovski's last-gasp strike earned North Macedonia a famous win over the Azzurri.
Japan's first victory over the Socceroos in Australia since 1998 also secured Saudi Arabia's passage to Qatar and condemned Australia to a tricky path through two play-offs.
Financial details of the agreement were not announced.
Earlier in the day, the International Olympic Committee had urged sports bodies to exclude Russian athletes and officials from international events, including soccer's World Cup.
The Swedish federation also released a statement on Saturday.
The 60-year-old took over in 2016 and helped Brazil qualify for the 2018 World Cup in Russia, where they were knocked out in the quarterfinals by Belgium.
The Champions League final is scheduled to be held in St Petersburg in May but sources have told Reuters that European soccer governing body UEFA is set to move the match to another venue.
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