What are the downsides of 360-degree feedback?

The main one is that 360 feedback gets used for evaluation when it was designed for development. The moment people know their peer ratings affect someone's pay or promotion, the ratings stop being honest. Everything else follows from that: reciprocity, where two people rate each other generously so both look good; score inflation; vague comments like “great team player” that tell nobody what to change; recency bias, where raters remember the last six weeks rather than the year; survey fatigue, where quality collapses by the fourth review a manager completes; and no follow-through, where a report nobody acts on teaches people the next cycle is theatre. Software can fix some of this by enforcing minimum rater counts, hiding results below an anonymity threshold, prompting for specifics when an answer is thin, and capping survey length. Software cannot stop you using developmental feedback in a promotion decision. That one is a process problem.