There was no one single moment, one big problem that ruined the whole thing. WoW died a death of a thousand cuts. However, I think you can pinpoint the moments that started the trends that would stack up to WoW's undoing, and this actually started all the way back in the Beta.BETA
Reversing the decision to make Undead player characters classified mechanically as undead, and reverting them back to humanoid like the other races. Set the trend of cowardly backtracking and homogenization instead of trying to make cool and flavorful ideas work.
Keeping the faction system after they redesigned the game from the ground up to be a PvE focused MMO with basically zero PvP mechanics at launch beyond the flagging system. Set the trend of clinging onto outdated mechanics or bad ideas well past the time they should have dropped them. It wouldn't be until TBC that they would finally recognize, for instance, that most people weren't rolling shamans and paladins to be healers. Some ideas they straight up never let go of, like the fucking faction system which is still around and they even had a whole ass expansion centered around it, when the game is arguably more PvE oriented than ever.
Professions becoming the forgotten middle child of the development team. Blizzard basically only updates the professions once every expansion and this was a precedent set all the way back in Vanilla when they basically allowed the professions to slowly slide into irrelevance, especially the professions based around crafting gear.
The use of cross-realm bullshit. Vanilla saw the first use of cross-realm for the instanced battleground content. Not so bad at the time, but little did the playerbase know at the time that this would be the start of Blizzard basically annihilating server identity with cross-realm bullshit which would eventually morph into super-servers, sharding, etc.TBC
This is the first expansion that saw cash shop bullshit, including "heirloom" items that would basically allow players to speed through the leveling process
This is the expansion that saw the elimination of faction-exclusive classes with Draenei shamans and Blood Elf paladins. Not only did this snap the lore over its knee, including the existing story of the Draenei and Blood Elves, whose poor writers were handed this massive lore change last second, but this completely eliminated the sole reason for the faction system's continued existence. Set the trend of very bad decisions made essentially on impulse. Did give us the hilarity of the Draenei saying "I guess shamanism is the Holy Light too I guess lmao" and the Blood Elves sucking off a Naaru in the basement.
On a related note, added the Arena, a non-faction PvP mode. Not a bad development, but really highlighted what a completely useless, vestigial mechanic the faction system had become at that point, and would remain to this day.
Set the trend of sabotaging previous content, with Outland's gear having massively overinflated stats that starts at a 57 level requirement, easily outclassing most Vanilla raid gear and essentially ensuring that people couldn't just stick to Vanilla until they had gotten through Naxx, they HAD to buy the expansion.
In a similar vein, sabotaged the world's original selling point of being a seamless open world, by putting two very big, very noticeable seams around Quel'thalas and the Azuremyst Isles, all for the purpose of ensuring that lowly non-expansion players would not even be able to look upon expansion content. Even sabotaged the big capital cities Blizzard took the time to put together for the new races, since no one would ever visit them due the them being in a fucking instance.
This was also the expansion that introduced daily quests. It was originally confined to a single island and the idea was that it would allow players to farm gold for themselves, undermining illicit gold farmers. This format would eventually consume the entire game.
This is also the expansion that would see some flavor stripped from the classes, such as Divine Intervention removed from paladins and Ritual of Doom removed from Warlocks, a grim trend that would end in all the classes being stripped of all identity.
This was the expansion that started allowing players to teleport into instances instead of going through the instance portal, though you had to discover the instance portal first.
This is the expansion where "gearscore" became a thing. Admittedly, this was from the playerbase, but was essentially endorsed by Blizzard when they should have cracked down on it.
Also, IIRC, this is the expansion where they introduced quest markers and thus the destruction of exploration.WRATH
This is the expansion that introduced phasing, originally a neat idea that would essentially allow players to have a visible impact on the world after completing quests, this would take over and basically destroy all sense of this MMO actually being an MMO. It was the predecessor to shards.
Introduced "hero classes" with the death knight. Not as evolutions off of existing classes, but as classes that get to start at a higher level because they purchased the xpac.
First expansion to have flying mounts in a terrain largely devoid of verticality. Flying mounts in Outland were okay because Outland made full use of the Y axis, in Northrend they were just used to skip past content rather than explore it.
Dumbed down, "fast paced" content centered around spamming AoE. This is the expansion where people stopped using crowd controls and planning altogether and would just clear entire rooms with AoE spam. Mana started becoming a vestigial mechanic for many classes in this expansion.
LFG/LFR bullshit. Instead of assembling a party, sit in a fucking queue and wait your turn. Now with cross-realm bullshit and not even needing to know where the instance portal is, just teleport there the moment you're the appropriate level like it's a fucking game from ReBoot
This is the first expansion to really put an emphasis on running dungeons and raids to collect Good Boy Tokens instead of gear.
Got rid of 40 man raids, only 25/10 mans. We would never see 40 mans again.
This was the first expansion where they tried to give the game a coherent narrative. Seemed like a positive at the time in comparison to TBC's use of the Frozen Throne characters as raid fodder, but Blizzard demonstrated in this expansion that the days of Starcraft and Warcraft 3 were behind them and they had basically forgotten how to tell a coherent or compelling story, at least one that was compatible with the narrative up to that point. Blizzard trying to tell a story after this point would wind up being one of the world's greatest monuments to bad writing. For all the problems the Wrath narrative had, it would prove to be the peak of Nu-Blizzard's writing capabilities, which is sad.
Was also the first instance of Blizzard's official, in-game plot being heavily informed by it's thoroughly garbage "expanded universe".
Introduced the barber shop, largely destroying visual identity with characters and proliferating anime haircuts which clashed badly with the game's "power metal album cover" art direction.CATACLYSM
The revamped the Old World, and unintentionally killed their golden goose. The original Old World was pretty masterfully put together by the original WoW team to hook players in and get them invested in the game world. The revamp made it more about speeding the player along to max level with quest chains that end practically before they even began and a ridiculous amount of handholding. Tellingly, this is the first expansion that saw a drop in subscriptions and Blizzard would never be able to recover it's Wrath peak.
Blizzard attempted to correct its course in regards to instanced content, restoring it back to essentially TBC difficulty and pacing from Wrath's spamfest, which they almost immediately backtracked on and nerfed to the content to be in line with Wrath's standards, an ultimate concession to power gamer dipshits that would forever cement Blizzard's direction as a MMO developer and seal WoW's decline.
It also introduced transmog, finishing what the barber shop started by completely annihilating visual identity and making player appearance almost entirely a case of dress up doll house where a technically in full plate armor can look like they're in a bikini if they have the right transmog items.