Several reasons I can think of. For one, no one at Yahoo seemed to understand what Pipes was for (part of a wider problem where Yahoo didn't seem to know what the company was for).

For another, Yahoo legal prevented us from doing any kind of long-term storage of RSS feeds. That made the service far less useful than it could have been.

Finally, they didn't give it any resources at all. Management was too preoccupied with the failed Brickhouse project (internal startup incubator) and the host of failed ideas that it spawned.