The legal fisticuffs are finally flying between eBay (NASDAQ:EBAY) and Craigslist.
eBay claims that the minority stake it acquired five years ago from a disgruntled investor has been diluted so much that the online auction specialist no longer has a seat on Craigslist's board.
Craigslist has some serious claims of its own, though. It argues that eBay used the inner workings of Craigslist to launch its own rival Kijiji marketplace.
Yes, there's a lot of bad blood here. It makes you wonder how the two can even be joint investors in a company when each one has mutually exclusive goals.
Craigslist was once seen as an eBay slayer. Even though eBay was able to stand up to rival auction sites from Yahoo! (NASDAQ:YHOO), Amazon.com (NASDAQ:AMZN), and Overstock.com (NASDAQ:OSTK), Craigslist put out a viral -- and, in nearly every case, free -- platform, with a localized focus that threatened the viability of eBay's fee-based auctions.
Of course, Craigslist didn't kill eBay. The world's leading auction site has stumbled lately, but it's still substantially larger than it was five years ago. If anything, Craigslist has been a nail in the coffin for newspapers, with free local ads eating into traditional personal and classified spots.
The auction marketplace is also thriving overseas, whether it's Latin America's MercadoLibre (NASDAQ:MELI) or eBay's recently acquired Gmarket in South Korea.
I'm no legal eagle. I can't even begin to guess who will be the victor in this battle. The one thing I do know is that these two companies need to be separated. The easy solution would be for Craigslist to buy out eBay -- or even vice versa -- but Craiglist has taken a Wikipedia-esque attitude in failing to monetize its site. However, until one or the other is shown the door, pride is going to make this situation unbearable.
How do you see the case between Craigslist and eBay playing out? Share your prediction in the comment box below.
