Ebay wins lawsuit against Craigslist

Ebay has prevailed in a bitterly contested lawsuit against Craigslist, the online classifieds site in which the auction group owns a significant stake. In a ruling by the Delaware Court of Chancery on Thursday, Ebay won back a 3.55 per cent equity stake in Craigslist, which is privately held. The two companies were once allies. Ebay acquired a 28.4 per cent stake in Craigslist for $32m in 2004. But Craigslist called foul three years later when Ebay launched its own classifieds site, Kijiji, saying it has used its board seat to obtain proprietary information it then used to start a competing site. Craigslist then diluted Ebay's stake to 24.85 per cent, stripping it of its board seat, which soured relations between the two companies. The ensuing trial resulted in colorful and often scathing testimony from top executives from both companies. During the hearings, it was revealed that Ebay hoped to acquire Craigslist outright at one point. In his opinion, William B Chandler III, a Delaware chancellor, wrote that "[Craigslist chief executive Jim Buckmaster] and [Craigslist founder Craig Newmark] breached their fiduciary duty of loyalty by using their power as directors and controlling stockholders to implement an interested transaction that was not entirely fair to Ebay, the minority stockholder".