"The auction house was founded out of the need to legitimateize D2R Items third-party trading, so that players could remain in the game and do their trading rather than visit third-party sites, and as a result lower fraud, scams spamming, and also the profits of hacking the game, creating dupes, etc.," former game director Jay Wilson said in an interview with DiabloII.
Net after departing from the company. "The problem is, evidently, that it over-legitimized trading. It made it too easy. We're all aware of this , and its consequences. We were worried about these consequences prior to the event We believed that there were benefits that would outweigh the disadvantages. [World of Warcraft's auctionhouse] seemed like a good evidence of concept. Obviously we were mistaken."
The error was caused by two crucial areas. First, the auction house included the option of real money, which allows players to purchase loot directly. This allowed Blizzard to criticism of engineering low-quality loot drops to boost market exchanges, since it took a small percentage from every transaction.
Whether or not this was the case, the overall quality of loot was extremely poor at launch, and fans were justifiably suspicious--especially given that Blizzard's acquisition from Activision was only a few years old at this point, and longtime Blizzard fans were watchful for any resulting changes in corporate culture.
The second reason is that the real-money marketplaces made anti-cheat measures essential to the integrity and integrity of the sport. If a person could produce an item of value indefinitely, such as d2r items for sale, this would lead to scams and ultimately cause a decrease in the value the items.