

EBay vs CraigsList Complaint Released - rms
http://www.techcrunch.com/2008/04/30/ebay-vs-craigslist-complaint-released/

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maximilian
For the lazy, Craigslist says that they can dilute ebay's share because ebay
launched Kijijijijijiji, which is a direct competitor for craigslist.

I just went and checked out the Kijiji site Ebay launched. Its totally lame
compared to CL. Its weird how I now prefer the non-newness of CL's look. CL is
so clean and fast, that Kijiji just looks awful and cluttered. Not to mention
it uses Flash, which immediately gets minus points.

Yay for CL. I have gotten so many awesome things through it.

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gojomo
_For the lazy, Craigslist says that they can dilute ebay's share because ebay
launched Kijijijijijiji, which is a direct competitor for craigslist._

Sorta. Though Kijiji seems the motivating factor, the actual legal
maneuverings are a lot more subtle, even tricky.

In fact, there's a curious provision apparently adopted in 2004 when EBay
first got their stake. It said that the other shareholders had a right-of-
first-refusal (ROFR) to acquire EBay's shares, but that if EBay started
competing, that ROFR in EBay's share would expire. That's odd because the ROFR
is not for EBay's benefit, but the company/others... so letting EBay
unilaterally increase their freedom to sell their shares by _competing_ with
Craigslist seems backwards. (Instead, I would have thought the competing party
would lose _their_ ROFR to the others' shares.)

But I guess someone was thinking a few moves ahead, because it looks like
Craig+Jim used the expiration of the first ROFR (in 2007 because of Kijiji) as
rationalization for the creation of a new mutual ROFR. For agreeing to this
new ROFR, the agreeing shareholders (Craig+Jim) would get bonus shares....
such bonus shares being just enough to dilute Ebay below a 25% ownership
share, unless they also agree to the same new ROFR. 25% turns out to be a
crucial threshold for electing a board member or preventing other operational
changes.

Did Craig+Jim agree to the 2004 ROFR-expiration clause, knowing it would
provide a rationale for a later new-ROFR-justified dilution? Or was the 2004
agreement just broken, and now they're trying to recover from something which
gave Ebay too much freedom to both compete and sell their shares to anyone? I
hope Craigslist's filing(s) clarify things.

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rms
Funny that they appear to be alternating between docstoc and scribd for
embedded documents.

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immad
But wasn't Ebay always competing with CL even before Kijiji. The use cases are
not very different, CL just does it through free listings and Ebay has
auctions

