How did buyer negative feedback survive so long?

No other business has ever allowed their assets to say bad things about their customers in public, and the reasons are obvious. The business wants to attract and keep buyers, and saying bad things about buyers has the opposite effect.

And yet, ebay allowed negative things to be posted, in public on ebay computers, about ebay buyers, for some twelve years.

The effects were disastrous. The primary effects, namely buyers who left because bad things were said about them, were significant.

It was the secondary effect which actually was the disaster: buyers who left because they had a bad experience with some seller, but the only recourse offered would subject them to a negative public report.

During that era, sellers, feeling protected, became increasingly careless, and some sellers even developed business models which relied on the protection to avoid exposure. Eventually, all active buyers banged in to some unpleasant situation, and personally recognized how suppressed buyers had become.

Even after Ebay figured out the obvious, in early 2008, they acted lackadaisically, taking months to get the buyer exodus to stop (May, 2008).

How did such a bad idea survive so long?

It's an interesting question, with two foundational answers.

1. Ebay itself is a "positive feedback loop explosion". The kind of thing which physicists were a little scared of when they first ignited a nuclear explosion. Maybe the whole universe would be destroyed.

Once the WWW internet infrastructure was in place, ebay was ready to be sparked. Whoever did it first was going to win big, because auctions beget auctions. Buyers and sellers flock to the single best place.

2. Over-reverence with respect to the formula. Once the spark had ignited the explosion, ebay management continued to believe that their formula had some special role in creating that success. That formula included feedback, including buyer feedback.

The important aspects of the formula were simple competence in putting together a computerized auction system which ordinary people could use to buy and sell on the internet. The rest of the formula, including feedback of any kind, was just so much baggage.