Diablo III game director Jay Wilson, the auction houses, both gold and real money, "really hurt the game," distorting the game's item value and game focus.
Blizzard thought that only a small percentage of players would use the auction houses, but it ended up dominating the game, as nearly every single player used the auction house and half of them used them regularly.
Item rewards became meaningless, according to Wilson, since such items could be found easily at the auction houses. With that, money became a bigger motivator than actually killing Diablo.
Wilson stated, "I think we would turn it off if we could, (but it's) not as easy as that." Considering Blizzard gets a cut out of the real money auction house sales, it's not surprising.
The PlayStation 3 version of Diablo III won't have any auction houses.