Craigslist sues eBay, alleges corporate spy plan

SAN FRANCISCO – Online classifieds leader Craigslist.com filed a countersuit today against business rival eBay Inc., alleging eBay had used its minority stake in Craigslist to steal corporate trade secrets.

In a lawsuit filed in Superior Court in San Francisco, Craigslist challenged allegations in an eBay suit filed in Delaware state court in April that accused Craigslist of discriminating against eBay as a shareholder.

EBay’s suit charged Craigslist had used “clandestine meetings” to dilute eBay’s 28.4% stake in Craigslist to 24.85%, or less than a quarter of the company.

A spokeswoman for eBay was not immediately available to comment on Craigslist’s countersuit.

In addition to unfair competition and fraudulent business claims, the countersuit accuses eBay of copyright infringement and using misleading advertising on Google to run ads for its rival Kijiji site that appeared to be Craigslist ads.

The lawsuit demands that eBay restore all shares of Craigslist owned by eBay or for the court to require eBay to divest its holdings in Craigslist. The suit asks for a cut of eBay profits and for punitive damages.

EBay, the world leader in online auctions and payment services, took a minority ownership stake in Craigslist nearly four years ago as part of a strategy to buy up classified advertising services both in the United States and Europe.

In 2004, eBay began to expand into the market through the acquisition of online classified businesses Marktplaats and later, LoQuo and Gumtree. In 2005, eBay launched its own free online classifieds site named Kijiji in nearly a dozen markets in Europe and Asia. A year ago, it entered the United States.

Kijiji operates in hundreds of German cities and is popular in countries ranging from France to Italy to India and Taiwan.

Craigslist’s complaint alleges a plot by eBay to use its position as a minority shareholder in Craigslist and its position on the board to pressure Craigslist into a full-scale acquisition deal by eBay.

Barring that, Craigslist argues that eBay used its position to gather competitive information that led to the launch of eBay’s rival classifieds business. It charges eBay code-named this its “Craigslist killer” in internal strategy discussions.

“In the months leading up to the launch of its competing Kijiji site … eBay used its shareholder status to plant on Craigslist’s board of directors the individual responsible for launching and/or operating Kijiji,” the latest suit alleges.