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EcommerceBytes-NewsFlash, Number 2179 - December 11, 2009 - ISSN 1539-5065    0 of 4

Craigslist Founder Stays Cool Under eBay's Hot Cross Examination

By Ina Steiner
December 11, 2009

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eBay's lawyer Mike Rhodes of Cooley Godward spent four hours cross-examining Craigslist founder Craig Newmark on Friday morning. Mr. Rhodes seemed frustrated at times with Mr. Newmark's deliberate approach to answering questions. Mr. Newmark remained calm and unflappable during what was sometimes grueling examination.

Summarizing and paraphrasing some of key points:

  • Mr. Rhodes showed that Craigslist published some site metrics on its blog and that there were ways to get site metrics - however flawed or inaccurate - from sites such as Wayback machine and Compete.com. Craigslist has accused eBay of using Craigslist confidential and proprietary information inappropriately.
  • Mr. Rhodes pointed to evidence that eBay had offered to help Craigslist in October 2004, including emails from Kent Walker and Rob Chesnut with regard to Trust & Safety issues. Craig Newmark said the help was not of value and he wasted his time in unfruitful efforts as a result.
  • Mr. Rhodes pointed that the shareholder agreement between Craigslist and eBay in August 2004 did not include promises that former eBay CEO Meg Whitman personally made to Craig Newmark, and asked if it was Craigslist's legal team's fault for not putting Meg's promise into contract. Mr. Newmark has stated that Ms. Whitman broke her promises to him and called it a "betrayal of trust."
  • Mr. Rhodes went over some of the emails between Craig, CEO Jim Buckmaster, and media consultant Susan Mactavish Best in which they were developing public statements on what to say on certain matters, including about eBay's launch of Kijiji (its online classified site). Mr. Rhodes pointed that Craigslist publicly stated that it was not concerned about competition.
  • Mr Rhodes delved into legal issues of the corporate governance activities that Jim Buckmaster and Craig Newmark put into place in 2007 that are the heart of the case.
  • Mr. Rhodes tired to determine what Craigslist does with the cash it generates, he said because former eBay executive and Craigslist Board member Josh Silverman had testified he was concerned about Craigslist's use of cash. He asked if Craigslist business throws off a fair amount of cash, and Mr Newmark said, "I don't know if I can disclose that in a public setting. Mr. Rhodes asked if the company's operating margins were over 80%, Mr. Newmark said "We don't disclose that." At that point, Craigslist lawyer objected, stating that it was giving confidential information that was under seal.
  • Mr. Rhodes asked Mr. Newmark if he understood that the corporate governance measures do not address eBay scraping the Craigslist site; the purchase of Craigslist keywords on Google Adwords; and eBay's misuse of confidential data (these are issues Craigslist has alleged in a lawsuit against eBay in California).

Mr. Rhodes expressed great surprise when he purported to learn this morning that Clint Powell was Mr. Newmark's boss at Craigslist. ("Is he really your boss," he asked.)

Craig Newmark answered a few questions on the steps of the courthouse after his testimony. He said he was pleased to be done testifying. "I'm pretty grateful for the Court's cooperation."

He then said he was going to Washington tomorrow to meet with Veterans Affairs and judge an innovation contest. The VA lost ground in prior years, there is a backlog in medical claims and the GI bill is in bad shape, and 120,000 people have not been paid, he said.

A reporter from Bloomberg asked if Mr. Newmark could talk about the David and Goliath reference in general, which came up in his testimony (see AuctionBytes news article). Craigslist lawyer would not let him answer the question.

AuctionBytes asked if Craig saw parallels in the Craigslist community and the eBay community, he said people have the same values in common, those who use both sites.

Craigslist lawyer then whisked him away.

Craigslist CEO Jim Buckmaster is now on the stand.

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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