eBay’s Lawsuit Against Craigslist

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I know you’re getting bored with all the other Internet marketing intrigues out there, so here’s a new one: eBay is suing craigslist. Tantalizing, isn’t it?

By way of background, eBay bought more than a quarter of craigslist’s stock (28.4%) back in 2004. According to the suit, this January, unnamed “unilateral actions” by founder Craig Newmark, CEO Jim Buckmaster and/or the craigslist company itself diluted eBay’s shares, diminishing the power that eBay should wield by an alleged 10%.

eBay says that the unnamed actions were unethical and unfair, in addition to being a “breach” of the company’s “fiduciary duties.” citing their good history with craigslist, eBay expressed dismay at the recent developments:

[W]e have acted openly and in good faith as a minority shareholder, so we were surprised by these recent unilateral actions.

The suit, filed in a Delaware Chancery Court, is sealed to keep confidentiality restrictions between the companies intact. eBay hopes the court will rescind the January actions.

Craigslist reacted in a blog post, using some of the same language that eBay did:

We are surprised and disappointed by Ebay’s unfounded allegations, which came to us out of the blue, without any attempt to engage in a dialogue with us.

They continue, citing eBay’s own 2007 classifieds startup, Kijiji, as a possible motivation:

Coming from a shareholder that views craigslist as a prime competitor, filing suit without so much as mentioning these assertions beforehand seems unethical, and hints at ulterior motives.

Ensuring the future well-being of craigslist and the craigslist community is admittedly very important to us. But Ebay has absolutely no reason to feel threatened here — unless of course they’re contemplating a hostile takeover of craigslist [unlikely, since the company isn’t public], or the sale of Ebay’s stake in craigslist to an unfriendly party. (In which case, they’re out of luck. [sic]

And when asked point blank whether the allegations were true, Craigslist said:

Addendum in response to commenter question – To be perfectly clear, Ebay’s stake in craigslist has not been unfairly diluted as they have claimed.

Without public information as to what craigslist’s January actions were, it’s easy to side with craigslist. But what do you think is really going on here?


eBay’s Lawsuit Against Craigslist
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About Jordan McCollum
Jordan McCollum is a staff writer for the popular marketing blog Marketing Pilgrim. She has worked in search engine optimization with clients including 3M, Little Giant Ladders and ADP. After graduating from Brigham Young University, Jordan joined the SEO copywriting team at the Internet marketing firm 10x Marketing. After 10x closed its doors in December 2006, Jordan became a freelance writer and Internet marketing consultant specializing in SEO. She also has extensive experience with web analytics, conversion rate enhancement and e-mail marketing. WebProNews Writer
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