EBay makes public its complaint against Craigslist

The legal wrangle between Craigslist and eBay Inc. is about the competition in the online classifieds market, eBay's complaint in the case reveals.

Craigslist considers eBay's new site Kijiji a competitive activity that nullifies some shareholder rights eBay won when it bought a 28 percent stake in Craigslist in 2004, according to the complaint, which eBay made public on Wednesday.

But eBay contends Craigslist went too far in interpreting what rights eBay should lose. And it's suing Craigslist for allegedly diluting its stake unfairly.

"The original agreement between the two parties always envisioned that there could be competitive activity," said eBay spokeswoman Kim Rubey.

Craigslist said Wednesday in a blog posting on its site that eBay is intent on dominating the classifieds business.

EBay purchased its stake in privately held Craigslist from an unnamed former executive who solicited buyers.

EBay's lust for acquiring the rest of Craigslist is blatant throughout the complaint. EBay says industry analysts believe the online classifieds site is worth several billion dollars, and in July, former eBay CEO Meg Whitman told Craigslist she'd "welcome the opportunity to acquire the remainder of (it)."

EBay launched Kijiji in 2005 in non-English speaking countries and then in the U.S. in June 2007. On the same day, Craigslist sent eBay a letter saying it had engaged in competitive activity, according to the complaint.

"We are no longer comfortable having eBay as a shareholder, and wish to explore options for our repurchase," Craigslist CEO Jim Buckmaster wrote in a subsequent letter quoted in the complaint.

Then, Craigslist founder Craig Newmark and Buckmaster "engaged in a series of clandestine transactions designed to ensure that eBay would not be able to elect a director, and to either impose new transfer restrictions on eBay or dilute its interests, and to dilute the interest of the employee holders of company stock options," the complaint says.

Craigslist said its every action was for the sake of protecting the long-term well-being of the craigslist community.

"Sadly, we have an uncomfortably conflicted shareholder in our midst, one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits," the post said.

Parts of the complaint, mostly those that refer to stock holdings, are still blocked out at Craigslist request, eBay said.