Secrets of eBay-Craigslist Lawsuit Revealed: eBay "Obsessed With Profits"

Henry Blodget | April 30, 2008 10:36 PM

craignewmark.jpgeBay published a legal filing that finally sheds some light on its mysterious Craigslist lawsuit. As the WSJ tells it, here's the story:

  • eBay management went crazy watching Craig Newmark and Jim Buckmaster sitting on the Craigslist goldmine and refusing to capitalize on it. So eventually they decided to capitalize on it themselves--by founding Kijiji.
  • Craigslist, understandably, saw Kijiji as a sign that eBay was trying to compete with it. Craigslist, understandably, therefore told eBay it was no longer comfortable having eBay as a shareholder.
  • eBay's Meg Whitman offered to buy the rest of Craigslist.
  • Jim and Craig decided to dilute eBay's stake below 25%, which would eliminate the ability for eBay to elect a board member. To do this, they entereed into a series of board transactions that diluted eBay's stake by 13%.

Craigslist will respond to eBay's filing in a couple of weeks. In the meantime, it has this to say:

"As those who know us best will recognize, every measure we have taken has been for the sake of protecting the long term well-being of the Craigslist community. Sadly, we have an uncomfortably conflicted shareholder in our midst, one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits."

 

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36 Comments

gee said:
Ebay's greed rears its ugly head at every turn. Good for Mr. Newmark and Mr. Buckmaster for resisting these greedy animals!! I hope they win.
steve (URL) said:
i had the opportunity to meet Craig for the first time a few weeks ago, and to say "thank you sir for keeping craigslist what it is!!!". eBay is such an example of a HORRIBLE tech company. I have used eBay heavily as both a seller and a buyer, attended eBay Live!, and watched them for years. I know they've made a lot of money for themselves; but their own sellers despise them (myself included). And I would question what real value eBay has brought to society. Craigslist, the OPPOSITE. We need more values-driven people who are truly out to serve their customers, people like Craig, running tech companies!! And less of the greedy, abusive corporate types like eBay's senior management.
anon said:
Yet again Ebay makes a lousy acquisition decision. Ebay derives no value out of its Craigslist investment and worse, has been hobbled in its classified efforts because of it.
d said:
The board has a fiduciary duty to not dilute the shareholder value and to make profit. eBay might have a case regarding the dilution of shareholder value, but it won't do any good. Craig and Jim still outnumber the eBay board representative. And if eBay were to sell its stake to outsiders, then those outsiders would still be outnumbered.

As for making profit, the business judgment rule is likely to protect them for making the decisions they have that limit the amount of business growth, as long as the company is making money.

My guess is that eBay is angling to force the majority shareholders, Craig and Jim, to buy the shares at a price near where eBay purchased them at, regardless of the poor judgment eBay used when making its purchase. eBay overpaid then, and most of the public and analysts felt they did then. The value should be based off the actual profits and reasonable profits expected rather than som pie in the sky price.

Remember that we're only getting eBay's side of things and it really doesn't sound as bad as they make it out to be.

It'll be interesting to see how this turns out.
It's called capitalism said:
OMG, you mean eBay's objective is to make profits for its shareholders? The horror.

You guys are really living in lala land. Ebay acquired 29% in craigslist for peanuts. Since they know they will never make a profit with craigslist, they went ahead and gave kijiji a try.

But that doesn't entitle craiglist to break minority protection laws and start issuing weird and obscure reorganization shares to dilute eBay.
classifieds said:
If craigslist added global search to their local search, what happens to ebay?
Billy said:
I never understood why Craigslist sold a piece of the company to eBay in the first place. I have been watching and waiting for this to happen. Anyone who invests in a company is going to want some sort of return.
Sri said:
In the early days of Craigslist, Craig and Jim borrowed money from a guy who later sold his stake to Ebay. Ebay had nothing but evil intentions in acquiring that share. They tried to smoothly buyout Craigslist and turn into a profit making machine for them. That did not work out as anybody who knows about the ethics of Craig and Jim would have expected. Now they are trying this evil, stupid stunt to derail Craigslist. Ebay is going to pay dearly for this in terms public backlash against them. In life, it's not always about profit and loss. As Microsoft can testify there are certain companies that people would love to see go down, even if it means they have to forgo some profit. Ebay is on the verge of joining such group of companies now.
broadcast.com said:
"Ebay is going to pay dearly for this in terms public backlash against them."

I, for one, will switch to Yahoo! Auctions!!!
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"Ebay is going to pay dearly for this in terms public backlash against them."

I, for one, will switch to Yahoo! Auctions!!!
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The below was taken from a forum on eBay:

For people who are new to the eBay boycott:

As per eBay's new "restructuring" policies and changes, if you want to sell on eBay, you must allow eBay to:

1. Steal your right to leave honest feedback

2. Force an unfair DSR system.

a) Punishing you for favorable ratings between "Good Transaction" & Excellent Transaction"

3. Hide your listings in "Best Matches", but not tell you how placings are calculated.

4. Force you to accept PayPal.

5. Put "WARNING" signs on your listings for not offering PayPal.

6. To refund YOUR money (via PayPal) to a customer at PayPal ‘s sole discretion.

7. Withhold your funds for 21+ days, via PayPal.

8. Hide your bidders' IDs.

9. Pad their listing numbers.

10. Lie to the media.

11. Give bad customers coupons, so they will continue to abuse sellers.

12. Increase your FVF by 67%, at their whim.

13. Withhold performance discounts from you.

14. Throw away your feedback percentages, except for the last 12 months.

15. Remove your auctions and not notify you why.

16. Censor your opinions and ban you for those opinions.

17. Red flag your auctions and put others listings on them.

18. Ruin their own reputation by protecting scammers.

19. Make you pay for their mistakes.


If you are boycotting eBay, please add your name to the map at:

http://www.frappr.com/?a=constellation_map&mapid=137440513566
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Ebay SUX, I've been using them for many years and alas finally their lude practices did in fact show there evil head! No rights for buyers at all! This turd...thewanderer316 was to fix my gaming system and eventually kept it and the money I've paid to include shipping twice. When I threatened to file a dispute with negative feedback his reply was."lol, go ahead tough guy you'll be lucky to get your money if that and I'll just have a PSP for myself." He was right, I'm looking at sueing ebay and this seller soon!
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Horde Leveling Guide
This wow power leveling guide starts at level 21,

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