Anytime more than one player is online, no hostile mobs spawn. We tested by having me (the owner) go online in the Nether, where hostile mobs always spawn, and, as expected, tons of ghasts and magma cubes began to swarm me. Then, I left and had my friend log on, and they kept spawning. Then, I logged back on, and the spawning suddenly stopped. I don't know what causes this, but it is causing huge problems.
Are you sure you are not reaching the global mob cap? If both players move to a new area where there are not already many mobs do mobs start spawning again? This can be an issue in particular if a player has many mobs around a base area.
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