EBay took Craigslist stake partly to block Google
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Last Updated: Friday, December 11, 2009, 12:20
  
Georgetown: An eBay Inc executive said on Thursday the auction company bought a stake in Craigslist partly to block rival web company Google Inc from acquiring the classified ads business.

"That was a consideration," said Garrett Price, who was eBay's principal deal maker in its USD 32 million agreement to acquire a 28.4 percent stake in Craigslist in 2004. He spoke under cross-examination in a trial taking place in Delaware.

Earlier in the week, eBay founder Pierre Omidyar said Craigslist's founder Craig Newmark seemed distressed by his dealings with an unnamed party that was in talks to buy a stake in Craigslist, but was "hostile to its mission."

Newmark is expected to take the stand later on Thursday to defend the classified ads company against accusations that it unfairly diluted eBay's stake in Craigslist and stripped it of a board seat.

Newmark will likely face questions about the negotiations that led to eBay Inc's stake in Craigslist, which has become a top website for selling everything from unwanted appliances to homes.

Ebay bought its stake from Philip Knowlton, a disgruntled former Craigslist employee, in the hopes of acquiring the entire classified site company.

Meg Whitman, a former eBay chief executive, said her management team identified classifieds as an important area to expand and originally considered Craigslist as eBay's "play in classifieds."

Whitman said eBay hoped to form a bond with Newmark and Chief Executive Jim Buckmaster and eventually convince them eBay would make a "good home" for Craigslist.

Emails among eBay executives have showed a culture clash between the companies right from the start. The emails were introduced in court as evidence and as a basis for questioning.

While eBay executives focused on "monetization" in their dealings with Craigslist, testimony portrayed Newmark and Buckmaster as protective of their company's identity as a community service.

Emails showed eBay executives considered the relationship with Craigslist as "dead" within a year of becoming a shareholder.

Emails also showed eBay executives expected they would violate provisions of their shareholder agreement with Craigslist when eBay launched its own US classified ads business, Kijiji.com, and anticipated losing their Craigslist board seat as a result.

Craigslist has sued eBay in San Francisco, saying the larger rival used its board seat to glean information for developing Kijiji, and employed deceptive tactics to direct traffic away from Craigslist's site.

EBay executives told the court some of the Craigslist information was used to evaluate Kijiji's potential but have dismissed any suggestion that Craigslist had a "secret sauce," beyond "local, simple and free."

The trial is being held in Delaware, where Craigslist is incorporated, and is being broadcast over Courtroom View Network.

Bureau Report


First Published: Friday, December 11, 2009, 12:20


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