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EcommerceBytes-NewsFlash, Number 2178 - December 10, 2009 - ISSN 1539-5065    3 of 7

Trial Testimony Reveals eBay Executives Frustrated with Craigslist Management

By Ina Steiner
December 10, 2009

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Craigslist has a loyal following due to it being free for sellers to list in most categories and due to its anti-corporate culture. But testimony from eBay executives in the corporate governance trial in Delaware this week is painting a very different picture of its founder and CEO than the altruistic image they've built up over the past 14 years.

Two executives portrayed eBay as going to extremes to try and work together to help Craigslist, but of being constantly rebuffed. In fact, the two executives who worked most closely with Craigslist in the beginning of the relationship - Joshua Silverman, now CEO of Skype, and Garrett Price - characterize their dealings with Craigslist as frustrating.

Meanwhile, Craigslist lawyers portray eBay as having taken advantage of their position by sharing confidential information with executives responsible for crafting eBay's own competitive offerings and of ultimately launching a competing service in the U.S.

eBay's Mr. Price said in his testimony on Wednesday that he felt Craigslist founder and CEO - the only shareholders besides Phillip Knowlton - were unreasonable in their demands during initial negotiatins to acquire 28% of Craigslist. According to Price, the pair told him they should receive the same compensation as Knowlton, otherwise they would not let the deal go through.

Mr. Price characterized their demands as "extortion," and painted a picture of two men very interested in money, but of wanting to keep that fact secret so as not to compromise their "carefully crafted" image.

Mr. Price also said Craigslist wanted to have provisions limiting eBay's ability to compete with them. He said he told them that was a "DEFCON 5 deal-breaker" that eBay would never agree to unless very narrowly defined, especially since they already competed with Craigslist to some degree.

Unlike other witnesses who appeared in court only when scheduled to testify, Craigslist CEO Jim Buckmaster has sat in the small courtroom since the trial began on Monday morning. He has shown no reaction as he listened to the witnesses' testimony. Craigslist founder Craig Newmark has not yet appeared, but may be called to testify as early as Thursday.

The schedule of witnesses has been as follows:

Monday: Former eBay CEO Meg Whitman, eBay founder Pierre Omidyar and former eBay executive Josh Silverman.

Tuesday: Josh Silverman and eBay counsel Brian Levey

Wednesday: Brian Levey and Garrett Price.

Garrett Price will be cross-examined by Craigslist lawyers on Thursday, and then Craig Newmark is expected to take the stand.

Trial proceedings will be updated regularly on the AuctionBytes Blog

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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