EcommerceBytes-NewsFlash, Number 2630 - September 14, 2011     1 of 4

Prosecutors Probe Whether eBay's Omidyar Misappropriated Craigslist Data

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Reuters said it has obtained a grand jury subpoena that shows U.S. prosecutors have launched a criminal probe into whether eBay employees misappropriated confidential information from Craigslist. eBay acquired 28 percent of Craigslist in 2004 and then had a falling out after eBay launched its classifieds site in the U.S. in direct competition with Craigslist.

An eBay spokesperson told Reuters it would cooperate in any inquiry related to the disputes with Craigslist. (The Reuters article is available on this page.)

eBay sued Craigslist in Delaware, and the judge handed down a mixed opinion in which eBay won some points and lost some points: he rescinded the Rights Plan adopted by Craigslist board members Craig Newmark and Jim Buckmaster that had diluted eBay's shares from 28.4% to 24.85%, but did not reinstate eBay's board seat. The judge also said eBay and Craigslist were like oil and water, and compared them to David (Craigslist) and Goliath (eBay).

The second lawsuit, Craigslist v. eBay, will be heard in San Francisco.

Last October, Craigslist amended the lawsuit against eBay to include founder Pierre Omidyar, who had represented eBay on the Board of Craigslist while at the same time serving as Chairman of the Board at eBay, as well as former eBay executive Josh Silverman, who had also sat on Craigslist board at one time. Both admitted to using confidential Craigslist data to help it with the launch of its own competing classifieds site, a practice with which then-CEO Meg Whitman seemed familiar.

In the amended complaint, Craigslist charged Omidyar, Silverman and eBay with disseminating and misusing Craigslist's confidential proprietary competitive information in order to compete unfairly, among other allegations. Craigslist also filed new claims for securities fraud and negligent misrepresentation.


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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