Sonic was originally a collaborative effort between the West and East as SEGA wanted a mascot to appeal to Americans to better compete with Nintendo, this didn't last because SEGA is incredibly xenophobic and had a history of doing shit like.. ignoring the Western Branch's pleas to not go ahead with the Sega Saturn (To the extent that in attempt to spite the Western Branch they inadvertently helped to create the N64 and PSX)

But I think what really takes the cake for me was the time Eternal Champions (a game made by the Western Branch) sold like hot cakes and had several toy and show offers from various companies, but the main company put a blacklist on anything to do with Eternal Champions because they were pissed that Americans liked the American Made Fighter Eternal Champions more than the Japan Made Virtua Fighter.

The collaboration of East and West saw Sonic coming from another planet called Mobius and having his villain have the name Dr. Ivo Robotnik (Eggman was deemed way too silly for a villain name), though this canon really only applied to America (Europe had their own canon, but it borrowed a lot from America)

After awhile, Sega basically said "Fuck the Western Branch", and changed his name to Eggman in all regions, despite complaints from fans that the Eggman name was too silly.. There was also a lack of communication, so you had a large amount of fans and game journalists alike that legitimately didn't know his name was Eggman in Japan (Early 2000's so the internet wasn't like it was today), meaning a lot of people were angry that the villain suddenly had a joke name for seemingly no reason. The fact that Sonic went from being on this bizarre alien world with loop de loops and other furries to being on real world Earth (when he was on real world Earth to begin with, the Genesis games just didn't communicate this well outside of the Japanese manual) also confused people.

Personally I wish they kept handling it like Sonic Adventure's dub and Archie Sonic's latter years handled it (with Sonic's friends calling him Eggman as an insult, while evil characters typically called him Robotnik)

Call me what you will, but I strongly wish Sonic retained more of the Western ideas as they work better than the Japanese ones imo.. Especially considering Japan is pretty lukewarm on Sonic (to the point that recent pollings in Japan showed that people believed he was a Nintendo property due to only being familiar with the character from his Nintendo-related crossovers), meanwhile he's consistently been a phenomenon in America, so it's pretty obvious where the money is. That and, well, Eggman probably sounds "Mysterious and cool" when English isn't your first language, when it is... Well "Eggman" sounds like he's from an educational PSA where he tells me the importance of a healthy breakfast with help from his wife Bacon Woman.

He was always Dr. Eggman in Japanese, they just localized it to Dr. Eggman because Murca.

It was a localization thing originally, and they just decided to bring the US in line with japan if I remember correctly