eBay Suing Craigslist

[poster_boy]

The Wall Street Journal is reporting that eBay is suing Craig Newmark and Craigslist's chief executive Jim Buckmaster for "unfairly diluting" eBay's interest in the popular classifieds site, which Henry Blodget for one thinks is worth billions. The suit was filed under seal because of "confidentiality issues." I've got calls into Newmark and Buckmaster and will report more information as soon as I get it.

When I recently interviewed Newmark, I asked about the controversial and secretive relationship between Craigslist and it's largest outside investor eBay. The direct and down-to-earth Newmark was clear that he hadn't wanted to sell off 28% of the company, but if it had to be done, he was glad it went to eBay, a company with "shared values." The relationship between the two is not quite so collegial today.

Yahoo Finance [finance.yahoo.com]

[PaulPA]

Shouldn't you be posting this as a quote since it came directly from another sources?

[poster_boy]

Shouldn't you be posting this as a quote since it came directly from another sources?

That was, more or less, breaking news... here's a more formal article on the matter:

===========================

SAN JOSE, Calif. (AP) -- In a move that pits two of the Internet's most popular sites against each other, EBay Inc. sued Craigslist on Tuesday, alleging the classifieds company unfairly tried to dilute the online auctioneer's stake in it.

EBay (EBAY, Fortune 500) purchased a 28% stake in privately-held Craigslist in 2004.

But in January, eBay says, Craigslist's board, consisting of founder Craig Newmark and Chief Executive Jim Buckmaster, unilaterally acted to dilute eBay's economic interest in Craigslist by more than 10%.

Craigslist spokeswoman Susan MacTavish Best said the company would likely comment on the lawsuit late Tuesday on its blog.

CNN Money [money.cnn.com]

[farmboy]

From the CNN article:

San Jose-based eBay made $7.7 billion in revenue in 2007 and has 279 million registered users.

Reporters keep repeating this figure or similar figures in articles. What they should say is eBay has 279 million registrations. Some individuals have multiple registrations.

And even still there is no indication of how many of those 279 million are active or have been in the past month, 6 months, etc.

FarmBoy

[kaz]

Here is craigslist's response -

To be perfectly clear, Ebay’s stake in craigslist has not been unfairly diluted as they have claimed.

[blog.craigslist.org...]

Seems bizarre that ebay would make this move without even communicating to craigslist about it. Nice biz partner!

[trungngo]

I love how CraigsList tell to ebay "we have always treated Ebay very fairly as a minority shareholder... ".

I bet ebay want a bigger pieces of CraigsList and all the money potential that CraigsList could have. But CraigsList said no ... that made them upset.

[ebound]

I don't use ebay and I can't say that I've even been on the site in the last 5 years, so I don't keep up with it, other than what I hear on CNBC occasionally. I could actually care less about ebay.

But, I had NO IDEA there was such an anti-ebay movement out there. Reading the comments on the craigslist blog post was interesting.

Fee-bay, that's funny.

[ispy]

Craigslist just is not cut out to move into traditional business territory. You can feel the grassroots vibe there and thats what keeps users coming back. If they try to grow in this direction, or meld Ebay into the ads somehow, I can see them loosing visitors and folding very quickly.

[walkman]

can someone explain in layman terms what this is about? Is it about voting interest or ownership interest? If ebay owns 28%, shouldn't a dilution dilute all shares equally?

[limoshawn]

What an unfortunate situation. It would not do for me to be in Craig's position, I would have shut the whole thing down the day EBay bought its way in!

[walkman]

>> I would have shut the whole thing down the day EBay bought its way in!

selling it for some $1 billion would have been better than shutting it down ;)

[limoshawn]

$1 billion would have been better

Maybe, if i could get the satisfaction of selling to Google or someone else that ebay could not bully around. Other than that it simply would not be worth it. Some things are worth much much more than money, Mr. Newmark was lucky enough to discover that.