No One Puts eBay in a Corner

Just because Craigslist is free doesn't mean it can give itself away.

eBay (Nasdaq: EBAY  ) is filing a lawsuit against Craigslist, alleging that the popular online classifieds site is diluting the 28.4% stake that eBay acquired four years ago.

More to the point, eBay is citing actions by Craigslist founder Craig Newmark and CEO Jim Buckmaster earlier this year that dilute eBay's stake by more than 10%.

Details are sketchy at the moment, mostly because eBay's legal complaint is filed under a seal to protect confidentiality restrictions. That certainly can't stop us from cooking up our own conspiracy theories, because this whole eBay-Craigslist pairing was about as eclectic-looking as the Julia Roberts-Lyle Lovett pairing.

eBay's minority stake in Craigslist came about as dumb luck, when a former Craigslist executive wanted to cash out of the privately held company. It's always been hard to peg a value on the site, especially since it refuses to take display ads or charge for listings (beyond meager fees for corporate job listings in certain markets and brokered apartments in New York City).

One can't blame eBay for snapping up the stake back then. Craigslist posed the biggest threat to eBay's model. Rival auction sites like Yahoo! (Nasdaq: YHOO  ) and (Nasdaq: AMZN  ) , and eventually (Nasdaq: OSTK  ) and innovative jewelry auctioneer Bidz (Nasdaq: BIDZ  ) , never really slowed eBay down. The real threat was the wide-open challenge of an intuitive free classifieds site like Craigslist.

eBay was paying to sleep with the enemy when it bought its stake, but it felt necessary. Since Craigslist has changed little since its launch, it's safe to say that either eBay hasn't voiced strategic suggestions for the site or that eBay's advice has gone unheeded.

Last year, eBay launched Kijiji, its own free online classifieds website. It's a more colorful Craigslist, though naturally nowhere near as popular. It's gaining an audience with every passing month, and according to, it now ranks 4,104 among all websites.

So why would eBay raise a stink over Craigslist dilution when it owns the keys to a shiny and promising online classifieds site? Is it trying to force Craigslist to buy back its stake or turning the tables and acquiring all of Craigslist? Is it just the public culmination of a relationship that has been awkward for the length of a presidential term? Are Craigslist's dilutive moves a prelude to taking the company public?

The last point is unlikely, but anything it possible at this point. As strange as the initial deal was, the possible breakup could be even stranger.

Bid on related Foolishness:

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 628169, ~/Articles/ArticleHandler.aspx, 10/23/2016 12:48:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
EBAY $29.06 Up +0.04 +0.14%
eBay CAPS Rating: ****
AMZN $818.99 Up +8.67 +1.07% CAPS Rating: ****
OSTK $14.45 Down -0.35 -2.36% CAPS Rating: *
YHOO $42.17 Down -0.21 -0.50%
Yahoo CAPS Rating: **