Ebay Sells Ownership Stake In Craigslist, Drops Lawsuit

Ebay Sells Ownership Stake In Craigslist, Drops Lawsuit

In a complete about-face, online auction giant eBay is selling its 28.4 percent stake in local classified ad market Craigslist and, as an added bonus, is dropping its legal action against its former investment.

eBay bought its Craigslist stake back in 2004 for $32 million. The move was questioned because unlike profit-hungry eBay Craigslist deliberately keeps revenues low due to the personal beliefs of management.

The story got weirder still as a year after the purchase, eBay launched its own classified community website, originally named Kijiji and now called eBay Classifieds.

The decision to launch a rival marketplace was understandably not well received by Craigslist, which saw the move as an effort to cannibalize its business.

eBay's aggressive marketing tactics didn't help, either. The auction house bought "Craigslist" as a Google AdWords keyword, which redirected users to Kijiji.

Then, in 2008, eBay sued Craigslist, claiming that the company had diluted its ownership stake in order to keep eBay executives off the board of directors. Craigslist then counter-sued, claiming that eBay had put Kijiji executives in its company to steal trade secrets.

eBay obtained a partial victory two years later, when a court ruled that Craigslist had diluted its shareholding, but the court also ruled that eBay didn’t have a right to put its people on the board.

But the story is still far from over.

In 2011 a federal investigation was launched into eBay's conduct surounding the deal, specifically investigating allegations that eBay has been stealing Craigslist's confidential information in order to create the rival Kijiji business. At present no results of the investigation have been announced.

As of Friday of this week, all litigation between the two companies has now ended, with Craigslist back in private ownership.

eBay hasn't disclosed how much it received for the stake, and Craigslist isn’t commenting either, but confirmed the sale, in typical Craigslist fashion, with a quirky Shakespeare quote from All's well that ends well.

The federal probe into eBay's behavior is still ongoing, though no timetable for a conclusion has been given at this point.

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