Julia Wilkinson is a blogger, freelance writer, and the author of several books including "The eBay Price Guide" (No Starch Press, 2006) and "eBay Top 100 Simplified Tips & Tricks" (Wiley, 2004-6); Her latest ebook, "Over 500 Books that Sell for $50-$5000 on eBay," is available on her website.
The warm 'n' fuzzies are gone between craigslist and eBay. That is, assuming they were ever there to begin with. Craigslist is suing eBay, alleging that eBay used its minority shareholder status to glean proprietary information about craigslist that was used against it for the benefit of eBay's Kijiji.com classifieds site (referred to as a "craigslist killer" inside eBay, according to craigslist), unfair and unlawful competition, false advertising, and trademark infringement, among other things.
The text of the complaint unveils the juicy details. The marriage between the two sites (indeed, Meg Whitman referred to eBay's efforts to own part of craigslist as "a courtship") had issues from the start, as with many relationships where there is an unequal balance of power.
Craiglist (CL) had gotten cold feet initially, when in early discussions eBay allegedly wanted "blocking rights on all forms of corporate transactions..." and other rights not included in the minority interest. But when craigslist backed out of the deal, eBay pushed harder, inviting key CL execs to a meeting where eBay's then-CEO Meg Whitman made the case for the relationship. Whitman and other eBay execs allegedly referred to the companies' similar values and eBay founder Pierre Omidyar's "Code of Conduct."
She also emphasized how eBay could help CL on the matters of "trust and safety" and international environments.
But one of the things that impressed craigslist founder Craig Newmark and CEO Jim Buckmaster the most was eBay's "dedication to Pierre Omidyar's Community Values," with principles such as "We encourage you to treat others the way you want to be treated," which were similar to CL's own values.
(Interestingly, Buckmaster is described in his bio on the CL site as the "only CEO ever described as anti-establishment, a communist, and a socialistic anarchist.")
Newmark and Buckmaster were also swayed by Omidyar's philanthropy, according to the complaint, and found "extremely exciting" the prospect of having him on the CL board. Buckmaster even went so far as to conjecture that with Pierre and Craig on the same board, "i don't think i exaggerate in suggesting that the ensuing collaboration could have far-reaching positive implications for humanity, not to mention our respective organizations and communities." (They don't seem to like capital letters at craigslist).
But among all the kumbaya, some troubling things are alleged to have occurred which don't reflect the adage of doing unto others as you'd have them do unto you. CL says that at one point, Meg Whitman and eBay's then-CEO Rajiv Dutta purchased an option to acquire the Minority Interest from the former CL shareholder who held it, "thus precluding cl from finding an alternate home for the interest." And CL apparently had an alternative investor interested, who had already submitted a term sheet in connection with the possible acquisition.
But they still seemed off to an optimistic start, until problems arose, which CL alleges include eBay's pressuring for additional equity; planting the idea that CL would become a wholly-owned subsidiary of eBay, as other small companies had; and a claim that eBay should not have to pay for its large volume of job-posting advertisements which they placed on craigslist.
But arguably the biggest concerns were about eBay's use of craigslist's info and name to give a boost to its own startup classifieds web site, Kijiji.com. If there is an element of humor in the complaint, it is the screen shots of the Google ads eBay allegedly ran using links to "Craigslist.org.", "Craigslist.com," and "www.Craigslist.org," with subtext such as "Compare Kijiji and Craigslist.org." The people who then clicked on the links were supposedly taken not to craigslist but to Kijiji, eBay. or eBay.ca, the eBay Canadian site.
Craigslist seeks a judgment and injunctive relief, including the suggestion that eBay may have to divest its interests in the company.
It will all get duked out (or settled) in the courts, but the questions linger in the air: was eBay's behavior disingenuous, or was it merely being aggressive? Does eBay really stand by its community values which it has held dear since the early Pierre days? Are those values only meant for the communities within eBay’s holdings, and not for corporate behavior? Who will ultimately prevail in the online classifieds space, craigslist or kijiji (or someone else)?
In her early presentation to Craigslist, Whitman had allegedly noted that one of her sons had found an apartment using the site. One is reminded of the question at the beginning of the erstwhile tv show "The Odd Couple": "Can two grown men share an apartment without driving each other crazy?"