In a move that pits two of the Internet’s most popular sites against each other, eBay Inc sued Craigs-list, alleging the classifieds company unfairly tried to dilute the online auctioneer’s stake in it.
eBay purchased a 28 percent stake in privately held Craigslist in 2004.
But in January, eBay says, Craigslist’s board — made up 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 titled “Tainted Love” that Craigslist posted on its blog on Tuesday night, the company said that the allegations are unfounded and that the lawsuit came from out of the blue.
“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.
eBay, the world’s largest online auctioneer, was an unsolicited suitor to quirky Craigslist in 2004. 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 Craigslist spokeswoman Susan MacTavish Best said: “Craigslist has never sought any outside money, and that’s not going to change.”
eBay said at the time of the deal that it was interested in learning about the classifieds business, a portion of its own site that’s been growing rapidly in recent years.
San Jose-based eBay made US$7.7 billion in revenue last year and has 279 million registered users. It is the 17th most popular English-language site, according to traffic ranking site Alexa, while Craigslist ranks 45th.
Craigslist, based in San Francisco, has never disclosed revenue figures, and charges for job ads and apartment listings only in select cities.
eBay spokeswoman Kim Rubey declined to quantify eBay’s current stake in Craigslist.
The company is asking Delaware’s Court of Chancery to negate the actions of Craigslist’s board.
The complaint is under seal because of confidentiality restrictions, a company statement said.
Craigslist may ask the court to make the complaint publicly available, eBay said.
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