EBay wins a round in court against Craigslist

September 10, 2010 By JORDAN ROBERTSON , AP Technology Writer

(AP) -- In a skirmish between two Internet heavy hitters with a tangled relationship, eBay Inc. has convinced a court that it was wronged by antitakeover moves adopted by Craigslist after eBay started encroaching on its online classifieds turf in the U.S.

A judge ruled Thursday that founder Craig Newmark and CEO Jim Buckmaster violated their responsibilities to - which bought a stake in Craigslist in 2004 - with changes they implemented that diluted eBay's share from 28.4 percent to 24.9 percent and made it harder for eBay to sell the interest.

Craigslist made the changes in 2008 after determining that eBay had changed from a partner to a threat.

That shift happened after eBay launched a U.S. version of its Kijiji classifieds site - which competed directly with Craigslist - and started buying online ads steering looking for Craigslist to its own sites, Buckmaster testified in a nine-day trial.

The judge, William Chandler III of Delaware's Court of Chancery, ordered Craigslist to reverse the steps that diluted eBay's stake in Craigslist. However, he allowed another step that Craigslist took to keep eBay at bay to stand. That move made it harder for eBay to unilaterally name a director to Craigslist's board.

"EBay brought this suit to protect its own shareholders and preserve its valuable investment in Craigslist," Michael Jacobson, eBay's general counsel, said in a statement. "The evidence presented at trial demonstrated that the actions were taken by Mr. Buckmaster and Mr. Newmark to benefit themselves at the expense of eBay, and we are gratified that the court recognized these actions were both unfair and unlawful and rectified the situation."

Craigslist, which is based in San Francisco, representatives did not immediately respond to a message from The Associated Press.

The fight centers on whether Craigslist was justified in actions that it claimed were defensive.

Craigslist accused eBay of misusing confidential information to start Kijiji, trying to seize control of Craigslist after buying the minority stake, and refusing to make good on a promise to help Craigslist expand internationally.

Craigslist officials have said that former eBay CEO Meg Whitman, who is now running for California governor, assured them that Craigslist would be eBay's exclusive partner for online classifieds in the U.S.

After Kijiji launched in the U.S., Newmark and Buckmaster wrote Whitman and expressed that they weren't happy having eBay as an investor anymore and wanted to buy back eBay's stake or convince eBay to sell it to someone else, according to eBay's lawsuit. Whitman replied that eBay didn't want to unload its stake in Craigslist and in fact wanted to buy the company outright if given the chance.

EBay argued that it retained the right to compete broadly with Craigslist, and that the changes Craigslist made in response to eBay's moves went beyond the penalties allowed in the original shareholders agreement between the companies.

EBay, which is based in San Jose, shares fell 0.4 percent, or 10 cents, to $24.20 in extended trading Thursday, after falling 1.1 percent, or 27 cents, to close the regular session at $24.30.

Explore further: Whitman pledges not in Craigslist contract


Related Stories

Whitman pledges not in Craigslist contract

December 11, 2009

(AP) -- Assurances that former eBay CEO Meg Whitman gave Craigslist's officials before eBay bought into the online classifieds company were never put in writing, the founder of Craigslist acknowledged Friday.

Craigslist founder says eBay reneged on promises

December 10, 2009

(AP) -- The founder of the online classifieds site Craigslist says he began having concerns with eBay shortly after the online auction site took a minority stake in his company.

Whitman says eBay didn't misuse Craigslist data

December 7, 2009

(AP) -- Former eBay CEO Meg Whitman said Monday she was unaware of any attempt by the Internet marketplace to misuse confidential data from Craigslist to help eBay develop a competing online classifieds business.

Craigslist exec told Whitman had 2 sides

December 14, 2009

(AP) -- The eBay executive who led the online auction site's efforts to gain a minority stake in Craigslist warned that former eBay CEO Meg Whitman had a Jekyll-and-Hyde personality, the CEO of Craigslist said Monday.

EBay official: Employees shared Craigslist data

December 10, 2009

(AP) -- Employees of Internet auction site eBay shared confidential information gained from Craigslist with other employees developing eBay's own online classifieds business, an eBay executive said Wednesday.

Craigslist CEO asks SC AG to apologize for threat

May 18, 2009

(AP) -- The CEO of Craigslist is asking South Carolina's attorney general to apologize for threatening to prosecute the company if any advertisements on the Web site lead to a prostitution case.

Recommended for you

Wireless power could enable ingestible electronics

April 27, 2017

Researchers at MIT, Brigham and Women's Hospital, and the Charles Stark Draper Laboratory have devised a way to wirelessly power small electronic devices that can linger in the digestive tract indefinitely after being swallowed. ...

New design tool to enable global roaming smart phones

April 26, 2017

Wireless communications is a technology that is used every day. Across society, there is a move away from using the internet on desktop computers and towards smartphones, tablets and laptops. Engineers at the University of ...


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.