eBay files suit against Craigslist
By Amanda Fehd
By Amanda Fehd
SAN JOSE, Calif. — In a move that pits two of the Internet's most popular sites against each other, eBay Inc. sued Craigslist yesterday, alleging the classifieds company unfairly tried to dilute the online auctioneer's stake in it.
Online auction company eBay purchased a 28 percent 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 percent.
In an entry that Craigslist posted on its blog yesterday, the company said that the allegations are unfounded.
"Coming from a company that views Craigslist as a prime competitor, filing suit without so much as mentioning these assertions to us beforehand seems unethical and suggests ulterior motives. ... eBay has absolutely no reason to feel threatened unless a hostile takeover of Craigslist, or the sale of eBay's stake in Craigslist to an unfriendly party, is their ultimate goal," the post said.
In 2004, eBay, the world's largest online auctioneer, was an unsolicited suitor to quirky Craigslist. An unnamed former Craigslist shareholder sought out eBay and sealed a deal whose financial terms were never disclosed.
At the time, Newmark said the companies had similar philosophies, but a company spokeswoman said, "Craigslist has never sought any outside money, and that's not going to change."
At the time of the deal, eBay said that it was interested in learning about the classifieds business, a portion of its own site that's been growing rapidly in recent years.
The lawsuit was announced 45 minutes before the close of trading yesterday; eBay's stock closed at $30.89, up 26 cents, or less than 1 percent.
The shares gained 1 cent in after-hours trading.