Craigslist v EBay: A Fascinating Tale Of Moral Compasses And Sheep In Wolf's Clothing

By Tom Foremski - May 14, 2008

Craigslist is one of my district neighbors, I often see CEO Jim Buckmaster and his partner Susan Best, and of course, founder Craig Newmark. Cragslist is not only a San Francisco institution, it is one of the top ten largest web sites in the world, providing a mostly free classifieds ad service for millions of people in 567 cities.

It's an amazingly useful social service provided by a private company that happened to reluctantly acquire EBay as a minority shareholder in November 2004 when an early shareholder sold his shares to the online auction giant.

Initially Mr Newmark and Mr Buckmaster agreed to the sale because they were impressed by EBay's stated common values. They were also impressed by Ebay's founder and chairman Pierre Omidyar and his widely publicized philanthropic activities and they asked for him to be Ebay's representative on the Craigslist board believing he had " a moral compass similar to its own."

Things started falling apart very quickly as Ebay demanded more control over Craigslist and access to competitive information. The falling out between the two companies is now the subject of of two lawsuits filed against each other. Ebay has complained that Craigslist illegally reduced its minority holding and this week Craigslist complained that Ebay stole proprietary information and engaged in other nefarious activities.

On the Craigslist blog:

We filed a complaint in California today, charging eBay with unlawful and unfair competition, misappropriation of proprietary information, deceptive passing-off, business interference, false advertising, phishing attacks, free-riding, trademark infringement, trademark dilution, and breaches of fiduciary duty.

We respectfully ask the Superior Court in San Francisco to enjoin this conduct and order eBay to (1) make full restitution to craigslist, (2) disgorge their related profits (3) restore to craigslist all shares of the company acquired by means of, or for the purpose of unfair competition, and (4) pay punitive damages for their malicious behavior.

The text of Craigslist's complaint makes for fascinating reading and provides an inside peak into a very private company.

Full text of the complaint

Reuters story by Eric Auchard: Craigslist sues eBay, alleges corporate spy plan


                   

May 14, 2008 | Permalink | Comment | Category: CultureWatch | Subscribe to SVW

Comments (3)

There are many interesting themes this story raises such as how businesses, even when run by ethical people and committed to ethical principles, tend to act in their own narrow self-interest.
The issue that most interests me is the responsibility of Craigs List board members who represent Ebay. The law in this area is atrocious. They have a total fiduciary (ie legal) responsibility to act in Craigs List best interest. But everyone knows that they are supposed to represent and pursue the interests of their employer. While incredibly significant, the law and common practice in this area are basically at odds.

What do you think?


Tom Foremski:

John: I don't know anything about common practice but the law is clear that board members must act in the best interest of the company. But what if they believe the best interest is that it should be acquired? I don't know how this law has been interpreted by the courts but I'd love to know more...


Tom

The basic issue is the the person sitting on Craigslist's board has a conflict of interest.

Depending on corporate governance we use, the person cannot avoid conflicts between the competing product he or she is responsible for versus Craigslist.

There is no question that Craigslist would surely not have agreed to having this individual sit on its board had they known about the person being in charge of a competing product.

Craigslist versus E-Bay - trust, reputation and investments


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