No, it wasn’t. David Brevik, the original D2/D2:LoD game director, has explained this. Instanced loot had not been invented yet. FFA loot was not selected over instanced loot since instanced loot did not exist yet. The Wright brothers did not select did not have the option to choose a jet engine at Kitty Hawk.
Moreover, Brevik has said repeatedly if he could go back in time he would replace FFA loot with instanced loot. To see multiple links to verify Brevik’s words see: