eBay-CL: Smoking Gun?

I’ve long said that eBay’s presence on the Craiglist (CL) board, given the auction giant’s ownership of Kijiji was a breach of fiduciary duty in every sense — ethical and legal.

Indeed, eBay’s motivation to buy the stake may have been two-fold: buy CL or if not possible then “go to school” and use inside information to better compete with CL both in and out of the US market. As I said in mid 2007, having a seat on the board of a company you’re directly competing with would seem to be a significant violation of eBay’s fiduciary obligations to Craigslist (even if the board member had nothing to do with Kijiji, etc.). 

The latter is consistent with what Bloomberg appears to be reporting:

An EBay Inc. lawyer said confidential information the online-auction company gleaned from its part ownership of Craigslist Inc. was used to help start up a competing classified-advertising Web site.

Brian Levey, an EBay vice president and one of its in-house lawyers, said today that EBay received the information because of its minority stake in Craigslist and used it to develop the rival Kijiji site in 2007. Levey testified in a trial over EBay’s claims that Craigslist unfairly devalued EBay’s 28 percent stake in the company.

CL may have acted improperly in diluting eBay’s ownership interest but eBay pretty clearly has “unclean hands,” which will compromise their ultimate position in the litigation.


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