Craigslist and eBay, two of
the world's biggest websites, are going head
Metal halide lampsto head in a dispute that could have major implications for the future of the classified advertising giant.
Lawyers for the two Californian companies will take to a court Delaware on Monday, amid arguments over the size of eBay's stake in its rival and allegations of deceptive behaviour.
The case - which has been in process since last year - centres on eBay's decision in 2004 to
buy a significant stake in Craigslist from one of the site's early shareholders. The auction website alleges that Craigslist's executives have since conducted a series of secret deals that reduced its share and blocked its attempt to gain a seat on the company's board.
At the time of eBay's purchase, Craigslist chief executive Jim Buckmaster said he was happy to welcome the investment after an agreement that the larger company would not interfere in decision-making.
"They have no interest in asking us to change that in any way," Buckmaster told the Wall Street Journal. "They're happy with us having our full autonomy; they recognise us as experts at what we do."
However, the auction site has since lobbied for a seat on the Craigslist board – a move which it claims led Buckmaster and Craigslist founder Craig Newmark to secretly dilute eBay's shareholding from 28.4% to 25%, pushing it below the threshold for board-level represenation.
Those allegations have, in turn, caused Craigslist to file its own lawsuit against eBay, alleging that the auction site used its position and inside information to launch a competing classified website, Kijiji.
Last year the company alleged that eBay had acted in an "unethical" way.
"If it could not own Craigslist, eBay # would exploit its position
Metal halide lampsas an insider and use Craigslist's confidential information, experience, skill and innovations against Craigslist," said the company in its pre-trial briefing.
"We are very confident we acted properly throughout the relationship," eBay's deputy general counsel Mary Huser told Reuters last week. "We were open and honest regarding what we were doing and our intentions."
The stakes for both sides are high. A victory for eBay could increase its share in the San Francisco-based classified website - and possibly give it more say in how the site conducts its business. Craigslist, meanwhile, is hoping that it can fend off the allegations and protect its 90% of the American market from future incursions.
And despite Craigslist's nonconformist attitude and approach to advertising – it only charges for a handful of categories - there are large sums of money at stake. The San Francisco-based website, which has just a handful of employees, is expected to achieve revenues of around $100m this year despite the recession.
Senior executives from both organisations are expected to testify over the course of the case, including those who were involved in the deal at the time.
On Monday, the court is scheduled to hear from # eBay founder Pierre Omidyar, as well as the company's former chief executive Meg Whitman, who is currently running to succeed Arnold Schwarzenegger
Metal halide lampsas the governor of California.
