Suppose a friend promoted you over someone else who was vastly more qualified, and worked much harder than you for that promotion.
Etc.
Now suppose you're the one getting screwed over instead of the friend benefiting.
It's not nepotism if friends benefiting is merely a side effect of making the best business (or whatever) decision. But if that decision process is subverted in order to benefit friends, negatively impacting other stakeholders that you have a responsibility to, creating a work environment which is deeply unfair and unmeritocratic, etc., then that is absolutely a problem. This should be pretty obvious.