I think the awful nature of competitive online games specifically started with the introduction of matchmaking. The way it works now, the entire process of forming a team and playing the game is as depersonalized as it is possible to be, which studies show brings out the absolute worst in people. Prior to that, playing a competitive team game was a social activity - you had to join a guild or a clan, you had to arrange play time and get to know your teammates, you probably knew your opponents as well because you would do clan wars or whatever with the same rotating groups, and you were playing on smaller servers with a higher ratio of moderators so that people who were assholes (or cheaters) would be corrected or banned more easily.

Even if you weren’t doing organized team play, just playing longer sessions with the same group of people while the teams shuffle every match is better at passively encouraging good behavior because everyone in the server is building a reputation and rapport with each other. It wasn’t perfect of course, gamers were still Gamers back in the day so there was no shortage of shitty behavior, but it was definitely better than what we have now.