Slashdot Mirror
eBay Sues Craigslist
phpmysqldev writes "In a very random move eBay has filed a lawsuit against Craigslist to 'protect its investment and shareholders'.
"In a statement, eBay claimed that in January, Craigslist executives took actions that 'unfairly diluted eBay's economic interest by more than 10%'." eBay is a minority shareholder of Craigslist owning 28.4%. Craigslist suspects eBay's intentions are less than honorable, speculating about a possible hostile takeover. The court case is sealed and eBay has not elaborated on its claims."
eBay's intention was never honorable, and that was obvious. Why ANYONE would ever think otherwise is incredible, they have no track record of honorable. At least not since Jeff Skoll left.
It is a problem if they give the stock away for less than market value. If the stock is valued at 1 bazillion dollars (which it would be), then giving half of it to current employees would be, legally speaking, like an Enron-scale stealing from the shareholders kind of fraud. As an owner, Ebay can sue the management over this.
Legally, Craigslist managers are obligated to extract as much money as possible from the company and give it to the owners. This completely sucks for everyone, except Ebay, which may be able to use the fact that they haven't aggressively monitized craigslist as evidence of bad faith by management, and use that to take over the company. All they need is a court settlement of, say, a million more than craigslist inc has in the bank (which I assume is not-much) and then craigslist has to pay them in stock. And once Ebay gets more than 50%, craigslist as we know it is fucked.
Is it just me, or is eBay well on its way to becoming yet another evil .com?
They seem to becoming obnoxious and litigious bastards more and more. Then again, maybe we just don't see the "eBay saves kittens from pound" stories.
I gave up on eBay years ago, but it seems like the only time I hear their name nowadays is in a story which shows them to be rather annoying.
Cheers
Lost at C:>. Found at C.
Exactly. I had a couple of brief discussions over posts with Craig himself, back when he was CEO, and he saw craigslist as a community and runs it as if it were. I understand and respect this, being a San Franciscan myself; I find Craig's attitude to be an expression of The City's values with respect to greed and capitalism. Craig rightly values friends and having duty and loving work combine.
N.B. Craig likes to code. I take that back. He LOVES to code. That's why someone else is CEO. Craig just wants to hang out with his friends (perhaps hundreds or thousands of them) and invent things to do with computer programs.
Sounds like a good life to me! That's the nature of San Fran City and that's what made me fall in love with it lo so many years ago.
But how do you value the first refusal in terms of cash. If he gets a $20 million offer from ebay, and craigslist doesn't have that kind of cash, isn't the outcome the same?
Makes you wonder if this wasn't eBay's point in buying the stock initially. Buy it, wait for actionable item, sue, take over, profit... Not a bad plan.
The CB App. What's your 20?
eBay Inc.
2145 Hamilton Avenue
San Jose, California 95125
Dear Sir or Madam,
I read that eBay has sued Craigslist on the grounds that eBay's shares in Craigslist have been "unfairly diluted." The details of the case are under court seal, but there is speculation, both in the public comment by Craigslist and on boards such as Slashdot.com, that eBay's real intention is a hostile takeover of a competitor.
In my view, Craigslist is one of the most popular services on the Internet due largely to its largely non-commercial nature. A possible outcome of the case is that Craigslist would be taken over and overrun by ads, and that it editorial policies would be changed to reflect more heavily commercial goals, to the great detriment of the quality of the service. I do not want to see this happen to this excellent community service. If the essential nature of Craigslist is degraded as a result of this lawsuit, then it is my intention to permanently boycott eBay and PayPal, to shift my business to eBay's competitors, and to encourage others to do likewise.
(Signature)
Good clarification on why they're suing. To elaborate on your suggested scenario: Craigslist, as a closely held company, has no public market for its shares, and therefore its shares are hard to value. In this case, the company can typically exercise its judgment on its own valuation in the case of a new offering of shares or options. You can definitely say that $100/share is the fairest price to pay for new shares in a company that is trading at $100/share on the stock market, but in the case of a private company like Craigslist, or M&M Mars, every party does their own evaluation based on comparable public companies, discounted cashflow valuation, liquidation value, etc.. Two parties could easily value a private company, one at 50, and the other at 100.
Whether or not it's the shareholders' decision or not is kinda debatable, but needing to issue more shares to bring on new employees is epic fail. They do everything they can to avoid making a profit (earlier posters talk about the fuzzy San Francisco community spirit thing), and then screw shareholders out of their stakes because they don't have enough money to hire? Not right. Not ethical.
Then again, it's not like eBay and other shareholders couldn't have known about their particular management "style" before purchasing the company. They purposefully make the website look amateurish just to make it seem more, "personal" I guess is the word, and do seem to charge just enough to get by. (The only exception is raising rates on job listings for some major urban cities.)
Nothing against Craigslist - I got a TV from them! But they seem kind of ambivalent about their own business incompetence, and my clueless armchair lawyering predicts that this won't go well for them.
DATABASE WOW WOW
eBay is scared of Craigslist because it is a powerful local market (in many areas) which they do not control and therefor can't take a 10-25% chunk of any transaction as fees. Craigslist is a real alternative to people who are fed up with eBay and the ever increasing cost of doing business on their platform. The purchase of PayPal by eBay did little to help this and the blatant lock out of Google's payment scheme revealed just how low eBay would stoop to protect their interests at the cost of their customers.
eBay jumped the shark but the problem is that there are few alternatives to it. As small as Craigslist is, it is really one of the few viable world-wide local markets on the web.
IMO It comes down to this. Company management is supposed to take actions that are in the best interest of *all* shareholders. If by providing incentives to bring on/keep great employees eventually increases shareholder value, then that's what they should do. The percentage of shares is not as relevant here as the value of the shares since everyone is diluted equally.
Yeah? Well I think you're overrated too.
What kind of free market allows share holders to sue the company they hold their shares in for a "dilution" claim?
So a company uses a branch of government to oppress one of its competitors, and you see it as an indictment against the free market?
Government causes a problem, and the solution you see is more government?
I really don't understand what you're getting at.
This literally happens EVERY SINGLE DAY in tech companies and is very easy to defend. As others have pointed out, this is almost certainly a hostile move as Craigslist is eBay's #1 competitor.