It is the Sephardi tradition, which dates back to one of the three ancient pronunciation traditions (called the "Palestinian vocalization" by scholars, meaning it was used in the Land of Israel, but outside of the Galilee).
So no, it's not a modern simplification. It's just opposed to the other two ancient traditions, and several of the modern ones.
As Drink said, the vowels of Modern Hebrew are mostly based on the traditional Sephardic pronunciation.
In traditional Ashkenazi and Yemenite pronunciation, the first is pronounced 'ay' and the second is pronounced 'oy'. But you'll rarely hear those pronunciations in normal, everyday speech except among very religious people. I believe the only other traditional pronunciation that differentiates the two is the Persian one, which follows the rules of Persian phonology here.