What Little I Know…

Well we wouldn’t be much of a classifieds and media blog if we didn’t cover the lawsuit filed by eBay against a site it has some ownership in, Craigslist. The battle between the two popular classified brands is finally headed into court this week.

To bring every one up to speed, it is the contentious level of ownership that has caused the two to end up in a nasty relationship, requiring legal intercession. Essentially, eBay is suing Craig Newmark for apparently diluting its investment in Craigslist, from 28.4 per cent to 24.85 per cent, in 2007. However, there was more than just the obvious financial impact of the lessened percentage ownership. The compounded issue was that with a below 25 per cent stake in Craigslist, eBay lost its seat on the Craigslist board.

eBay’s suit against Craigslist was formerly logged in April of 2008, but given the little to no press about it since then; we had just assumed it had gone away.

Now I understand eBay’s reasoning for wanting a stake in Craigslist. It is undoubtedly, the largest classified site in the US and is scheduled to make 100 million dollars in 2009 – all from a free classified model. Furthermore, just think, at the time of Meg Whitman and their Craigslist lust (2004), Craigslist appeared to be the fastest growing classified site and it was transforming online classifieds for good, and leaving a negative impact on classified media publishers – eBay included. Craigslist, on the other hand, should have done more from the beginning to dwarf the eBay play in their business. Even before eBay’s launch of Kijiji in the US, it was clear that they were an unfriendly competitor that proved no benefit to Craigslist at the time and or even now. To further support our puzzlement, we recall search giants like Google and Yahoo! expressing interest in Craigslist and building relationships there would have been a better strategic play in our minds.

Nonetheless, I am sure all of this will come out in the Delaware court, as sides try to state their compelling cases. Let’s also not forget that Craigslist is counter suing eBay, stating that they’ve misappropriated confidential and proprietary documents belonging to Craigslist, to bolster its own site (Kijiji). Craig Newmark could have a point here if he uses the claim of professional sabotage. With eBay sitting on the board for at least two years, there is no telling how they’ve used the insider knowledge on Craigslist to protect and target its Kijiji US launch.