I checked with the mod and they weren't trying to bury the story but rather to downweight it less than we normally would, in keeping with the #1 rule I described upthread (https://news.ycombinator.com/item?id=40712900).

The intention was to downweight it enough that it wouldn't be near the top of the front page but not so much that it would leave the front page. That's the same thing I would have done, btw.

It looks like what happened was that more user flags came in and that, together with the moderation downweight, moved the story off the front page. Eventually we noticed this and restored it to the lower part of the front page, which is the standard practice for stories of this kind, which we'd never allow to be on HN's front page if they were about anybody else. (Though, as someone pointed out to me, this story wasn't negative about YC.)