eBay Sues Craigslist, Alleging Stake Hindrance
EBay Inc, the world’s largest online auctioneer, sued Craigslist, a competitor in which it holds an ownership stake, in a dispute over whether the Internet bulletin board tried to weaken eBay’s control.
A statement from eBay claims the board of directors of Craigslist took unilateral actions to dilute eBay’s 28.4 percent stake by more than 10 percent. Craigslist is currently the Web’s dominant classifieds listing service.
The suit was filed on Tuesday in a Delaware Chancery Court and asked the court to rescind the unspecified actions to protect eBay’s stockholders and preserve its stake in Craigslist.
Craig Newmark, Craigslist founder, who runs the company in a famously open-minded style, and Chief Executive Jim Buckmaster were named defendants in the suit. They are the only members of Craigslist’s board of directors.
Craigslist said it was "surprised and disappointed" by eBay’s allegations, which "came to us out of the blue, without any attempt to engage in dialogue with us." The comments were posted on a blog on Tuesday.
The posting claims the lawsuit was filed by "a company that views Craigslist as a prime competitor” and that “it seems unethical, and suggests ulterior motives" such as a "hostile takeover" of Craigslist or the sale of eBay’s stake to an "unfriendly party."
Craigslist called the lawsuit an “unfortunate development” and said they always have and will continue to treat eBay “very fairly”.
In 2004, eBay bought a minority ownership stake and three years later launched its own free online classifieds site called Kijiji.
Both services compete directly in the U.S. and a dozen other countries. Kijiji tailors its ads to young families, while Craigslist maintains an open marketplace style.
A spokesperson for eBay said the disputed board actions concerned "corporate governance issues" and did not involve Kijiji.
“eBay can reveal no more about its complaint without Craigslist’s permission to protect information about the privately held Craigslist governed by confidentiality restrictions,” said the spokesperson.
On Tuesday, Nasdaq reported shares of eBay closed up 26 cents at $30.89.
Craigslist is a centralized network of online communities, featuring free classified advertisements for jobs, housing, personals, erotica, for sale/barter/wanted, and various other services.
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