Craigslist faithful rally against eBay

24 April 2008

Online auction firm eBay has filed a lawsuit against classified ads site craigslist, in which it owns a significant stake.

The details of the claim remain secret, but eBay alleges that craigslist's two directors took measures in January that "unfairly diluted eBay's economic interest in craigslist by more than 10%".

Ebay gained a minority 28.4% stake in craigslist in 2004, when a former craigslist employee sold them shares.

A post on the craigslist blog described eBay's action as "unethical".

"We are surprised and disappointed by eBay's unfounded allegations, which came to us out of the blue, without any attempt to engage in a dialogue with us."

"To be perfectly clear, eBay's stake in craigslist has not been unfairly diluted as they have claimed," the post adds.

Expressions of support for craigslist dominate the company's own blog entry on the matter, but also feature heavily on eBay's own discussion boards.

Meanwhile, in an article entitled No One Puts eBay in a Corner, Rick Aristotle Munarriz of The Motley Fool writes: "One can't blame eBay for snapping up the stake back then. Craigslist posed the biggest threat to eBay's model."

"Rival auction sites... never really slowed eBay down. The real threat was the wide-open challenge of an intuitive free classifieds site like craigslist."

Category: e-commerce