eBay Sues Craigslist 283
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."
would eBay sell craigslist on eBay or craigslist? (Score:5, Funny)
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Re:would eBay sell craigslist on eBay or craigslis (Score:5, Informative)
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Re:would eBay sell craigslist on eBay or craigslis (Score:4, Informative)
If ebay can get a controlling majority in craigslist they put the prices up to be higher than thier own and they win.
If ebay can bankrupt craigslist they buy the name/domains at the bankrupcy sale and either redirect it to ebay or set up thier own craigslist site with ebay like pricing. Again they win.
If they can get a settlement or judgement paid in stock that puts them closer to a controlling majority.
snap up shares when you can and harras the company with minority shareholder lawsuits (which are likely to cause pain to a lot of companies who aren't agressively monitising thier assets) in the meantime. Also harras the company with any other lawsuits you think you can get away with.
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Mod parent Informative! (Score:5, Funny)
Re:would eBay sell craigslist on eBay or craigslis (Score:5, Insightful)
Public company: Shares for sale to/from anyone via the official markets (NASDAQ, AMEX, NYSE). Private company: Shares for sale to/from anyone via go find them yourself and hand over the cash in person.
(Ignorance of the business world is bliss.)
Ignorance of business gets you screwed by the first unscrupulous person you have to do business with. Good luck with that unless you're a hunter/gatherer hermit who never does business with anyone.
Re:would eBay sell craigslist on eBay or craigslis (Score:5, Informative)
If you own part of a private company, you want to either just be a silent partner or you want you want to have controlling interest. Anything under 51% is not controlling interest. If you have less than 50% then you are at the whim of any decision you partners want to make, as long as that decision is within the laws and bylaws controlling your company.
Now if the Board (typically put in place by the majority owner, unless you have a close holding and cumulative voting) issues a bunch of shares without a previous non-dilution agreement, there will be a dilution of shares and potentially value. This is what eBay is complaining about.
From what I have read, the Board issued shares to another entity increasing the number of shares outstanding. Therefore, eBays original number of shares now come from a larger amount of shares, thus they have a lower percentage. As the value of eBays interest is based on the percentage of shares they basically have seen a forced decline in their investment. The Board has a legal fiduciary responsibility to all shareholders equally to give them value for their investment. eBay is suing as they believe that the Boards actions impacted the value of their shares, by reducing the percentage of the total value they are due.
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I very much doubt it's legal. It can't be.
At the very least, wouldn't that count as malicious prosecution?
Oh, it's like Pokemon! (Score:5, Funny)
Re:Oh, it's like Pokemon! (Score:5, Funny)
You really should talk to the newly Fox-owned Wall Street Journal about getting a job as an analyst.
You definitely make more sense than slimy Larry Kudlow or that crazy fuck Jim Cramer who yells and spits on himself. I don't think he "went bald" so much as his hair committed suicide just to get as far away from him as it could.
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Re:would eBay sell craigslist on eBay or craigslis (Score:5, Funny)
Safeway suing Starbucks (Score:5, Funny)
To summarise: (Score:4, Insightful)
But of course we're going to discuss it fully here at slashdot!
Re:To summarise: (Score:5, Insightful)
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Of course we'll speculate and discuss. It's an interesting situation even if we have few details.
Re:To summarise: (Score:5, Funny)
Yeah, he's pretty bad, but he ain't got nothing on "Anonymous Coward". That guy usually makes dozens (hundreds!) of posts per story and 90% of them have absolutely nothing to say ;)
Re:To summarise: (Score:5, Funny)
Wow, not only is that Anonymous Coward guy quite the prolific poster, he also makes fun of himself for failing to detect sarcasm.
You really should stay on your meds, Mr. AC.
For those of you that are going to ask (Score:5, Informative)
2) This is a dilution suit. This means that basically, in a closely held company, it's easy for a majority shareholder to screw a minority shareholder, since the minority shareholder can't outvote them and can't get other shareholders to support it. Therefore, we have a lot of laws protecting minority shareholders. In this case, it seems that eBay has issued extra stock, which means that eBay no longer really has 28%, but rather less, effectively. This CAN be legal, but there has to be a solid, nonpredatory reason for it.
3) eBay managed to get its share because craigslist had issued some shares to close employees, on the assumption that it didn't matter and was just to feel nice. One of those employees decided to sell his stake publicly, and eBay bought it. Normally, no one would have been able to get access to Craigslist stock.
Re:For those of you that are going to ask (Score:5, Informative)
Yeah Craigslist's attorney really F'ed that up - you can include a clause in the bylaws or a shareholder agreement which provides that the company has the right of first refusal to redeem any outstanding shares. That is pretty basic stuff, I am surprised they didn't think of it.
Re:For those of you that are going to ask (Score:5, Funny)
I wonder if they offered to pay with a cashier's check for a few hundred dollars over his fee.
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Which, in essence, values the company.
There are other ways to do it; you could allow the company the right to buy back the shares at a certain price, for example, regardless of other offers, if the shares were for sale.
trips up more companies than you'd think (Score:3, Informative)
SAIC (nee SAI) http://en.wikipedia.org/wiki/Science_Applications_International_Corporation/ [wikipedia.org], number 285 on the Fortune 500 list, was employee-owned until 2006 but didn't think to add the clause giving the company right of first refusal until the first time an employee left the company and declined to sell back the stock they owned.
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Re:For those of you that are going to ask (Score:4, Insightful)
Re:For those of you that are going to ask (Score:5, Interesting)
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.
Interview with Craigslist CEO (Score:5, Informative)
They're a profitable company; but not madly, hugely, enormously profitable the way they could be. I like that. Capitalism offers powerful incentives to participate in the economy, which is generally good; but it also has a tendency to encourage empire-building and delusions of grandeur. So it's nice to see a company once in a while which isn't hell bent on world domination.
I wish their pages were a bit better designed, though. I appreciate the focus on navigation, but would it kill them to put borders around some of the boxes full of lists, to visually group them? And they could make some improvements for screen reader users, especially adding headings so that blind visitors could have their screen readers jump to the headings in the page rather than having to wade through everything that comes before the part they're interested in.
Re:For those of you that are going to ask (Score:5, Informative)
3) eBay managed to get its share because craigslist had issued some shares to close employees, on the assumption that it didn't matter and was just to feel nice. One of those employees decided to sell his stake publicly, and eBay bought it. Normally, no one would have been able to get access to Craigslist stock.</quote>
That happens more than you think. I know of at least one case in my hometown where a farm family who had a large farm generations (I think back to the 1850's or before). He did some legal mumbo jumbo where he sold shares of the farm to his kids, thinking they would keep it in the family and they could profit from the farm, etc.
Well, one son decided not to keep the shares, so he sold them off to Con-Agra, a major farming corporation. Shortly thereafter, Con-Agra filed a minority stake lawsuit against the farmer, bankrupt him in court fees and lawyers, and the farmer was forced to sell the rest of the farm off to Con-Agra.
Congratulations Con-Agra, you got about a 10 million dollar farm for no more than 2 million!
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Re:For those of you that are going to ask (Score:5, Insightful)
Fixed that for ya'.
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Re:For those of you that are going to ask (Score:5, Insightful)
One interesting side note - I have used Craigslist on numerous occasions both to find and get rid of stuff. I've also used eBay to do the same. To post something on Craigslist takes me about 3-5 minutes. To post something on eBay (cause I only do so once or twice a year) seems to take closer to 30 minutes. Lately I've completely abandonded eBay - not because they charge me money, but because the process of using their service is so much more difficult than Craigslist.
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So, what you're saying is that Craigslist has managed to provide nominally the same service as the newspaper classifieds for less cost, is passing that savings on to the consumer, and that you find that 'wonky'?
What a bunch of jerks!
Re:For those of you that are going to ask (Score:5, Interesting)
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.
yep. (Score:5, Interesting)
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.
Re:The Real Reason (Score:4, Insightful)
Unfortunately, Ebay still has its place. If I'm trying to sell an obscure piece of vintage electronics gear, for instance, I'm probably not going to do very well listing it on Craigslist. (I'd do even worse if I didn't live near a major metro area.) This is where Ebay is perfect, because you can sell obscure goods to an international audience very easily. Unfortunately, Ebay doesn't seem to care about that, and would rather cater to "power sellers" who sell boatloads of phone chargers and other cheap Chinese-made junk with high "handling" fees.
I really wish someone would make a viable competitor to Ebay.
Sounds like... (Score:5, Insightful)
At first, I thought ebay was suing because craigslist was cutting into ebay's auction business. That would be ridiculous, which in American lawyerese seems to be spelled "with merit". Then I was shocked (shocked!) to learn that ebay owns almost 30% of craigslist. Nice little empire, indeed. In reality, it's just a pissing match.
Re:Sounds like... (Score:5, Funny)
Yet in Slashdotese it seems to be spelled "rediculous".
good idea (Score:5, Funny)
Re:good idea (Score:4, Funny)
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I don't know if I'd trust that "vendor" with a credit card though. I'm a bit concerned to where it would be swiped.
I'd be willing to bet, some of the more computer adept "vendors" would take PayPal. Do you want that paper trail though? Cash is always best for those moments you don't need haunting you in the future. When I run for president in 2012, I wouldn't want that fou
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You must be 'Client Number Ten' ;)
Hostile takeover? (Score:5, Insightful)
That being said, I think this is the long delayed consequences of selling that stake to eBay in the first place. Unless there is some special language in the company charter, the commonly accepted duty of corporations is to maximize benefits to the shareholder (not saying that it is right, only that it IS). I think eBay bought in years ago expecting to cash in on the big IPO, which never happened, or reap dividends when Craigslist started accepting ads, which it didn't. Now they want to use their minority share position to force the Craigslist management to run things the way eBay wants it.
I hope Craigslist crushes them, but I'm not betting on it.
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Maybe this is the conspiracy nut in me typing, but I think is more to just hinder the business operation of a competitor that gives its primary service away for FREE...and is still in business...and people like it.
Kettle, meet pot (Score:5, Funny)
Did they sue them... (Score:5, Insightful)
Just curious.
I've listed and sold a few items on eBay over the years, including recently and must say, eBay continues to get it wrong. What a fussy, buggy system. Simply interfaces gave way to bloated, unpredictable and just silliness.
As a buyer, the searches are less helpful all the time. "Look, dumbasses, I'm trying to find what I'm looking for," not a lot of other tripe you think I might be interested in.
eBay, want something to do? Go after those fecking frauds selling fake shite out of China. That should keep you busy for a while.
Meanwhile, Feedback system continues to be worthless.
Re:Did they sue them... (Score:5, Funny)
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In my last city, on the other hand, Craigslist was littered with useless postings in which clueless people were trying to sell things that they didn't understand. 90+ percent of the adds were along the lines of "Used black an
Let me put it in terms you can understand. (Score:5, Informative)
You, and nine friends, all pitch in $500 for a classic video game collection (a total of $5000). Each person has a 10% stake, so if the games go up in price, everyone profits.
Now imagine that the "chairman" decides to sell an additional $1000 stake to a new participant, ostensibly to purchase more video games. In return this person gets 17% ownership of the video game collection.
Do you see how this dilutes your share of the value? The $1000 stakeholder now has 17%, leaving you with only 8.3%. And suppose that the $1000 of new capital is used to purchase bogus games which have no real value, or even worse, is just pocketed by the chairman. You're getting screwed.
That's what it means when they say you need a "sound financial reason" to dilute the other shareholders' stakes.
The real question is, does Craiglist have this sound financial reason? Is the issuance of fresh stock going to lead ultimately to a gain for all parties? We don't know -- and that's the subject of this lawsuit.
I don't understand. (Score:2)
Now imagine that the "chairman" decides to sell an additional $1000 stake to a new participant, ostensibly to purchase more video games. In return this person gets 17% ownership of the video game collection.
Before, I had 10% of a company worth $5000, or $500. After I have 8.3% of a company worth $6000, or $500. So how does this dilute the value of my shares? How am I getting screwed?
If the chairman pockets the extra $1000, that's just good old fashioned embezzlement. That has nothing to do with the
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Before, I had 10% of a company worth $5000, or $500. After I have 8.3% of a company worth $6000, or $500. So how does this dilute the value of my shares? How am I getting screwed?
You get screwed if that $1000 is spent frivolously, down a rat hole or otherwise. In other words, spent in a way that does not equitably raise value for all shareholders.
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Say if you own stock in Ford, you can't own stock in GM or any other car company., but still be able to purchase stock in Microsoft or such. Or If you own stock in say, Apple, you shouldn't be able to own stock in Microsoft, but can own stock in Toyota.
My 403(b) (basically a 401(k) for non-profits) plan holds investments in every single one of those companies that you listed. I suspect that your 401(k)/403(b) does as well. And virtually every single mutual fund in existence will hold shares from at least two companies that compete with each other in some shape or form.
Unrestrained capitalism is no better than Communism.
I agree. But I don't see any benefit towards restricting what stocks an individual can own.
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if you still feel this is the case, please remove all indices and/or mutual funds from your personal and/or retirement accounts, as they all violate your beliefs (for example: multiple f
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Is it just me ... (Score:5, Interesting)
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
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"Well on its way"? Dude, that plane had a tailwind and arrived several years ahead of schedule ;) eBay has been an 'evil .com' for at least the last few years.
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Well, I haven't used them since likely before 2002. So, my exposure to them nowadays is limited to new stories.
Cheers
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the last round of changes (on ebay) have alienated the last wave of those who use ebay for convenience. for those that rely on them for their living (always suspect; but hey, whatever
around the time that ebay bought paypal, that was truly the beginning of evil.com for them.
Random how? (Score:2)
Greed and eBay's sagging revenue growth (Score:5, Insightful)
Totally accurate description, though.. (Score:4, Insightful)
A resource that they could extract advertising revenue for ~10-20 quarters, while destroying its value, and then move on to the next mine.
Craigslist current business model, however, can be better described as something like a tree farm or sustainable exploitation of a fishery, where the revenue production is comparatively modest in the short term, but consistent in the long term.
ebay should... (Score:2)
Intentions (Score:2)
Seems eBay posted the lawsuit on the "Casual Encounters" board.
Letter to Ebay (Score:5, Interesting)
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)
I'm sure this has NOTHING to do with the Economy. (Score:3, Informative)
Taking it out on craigslist because they (eBay) upped their prices and fees due to the fact fewer people use them... Nice. It has nothing to do with all the discussions in the news about the US economy sucking wind is really squeezing families making less than $100K a year.
Please...
Net.libertarians take note (Score:4, Insightful)
Thus you FAITH in the free market is no more founded in empirical reality than the faith of creationists. Time to go back to the drawing board now that empirical reality shows you are living in a fantasy world with assumptions about human nature every bit as flawed as the communists were.
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So when you have implemented a government that ISN'T run by corporations, cares about the people of the state, and is worthy of me putting all my eggs in that basket... then I will admit that the free market is not the way to go.
Uh, no (Score:4, Informative)
Regardless of what you think of eBay, this is a bad deal by Craigslist, if true.
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Re:Uh, no (Score:5, Insightful)
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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 b
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The Supreme Court has already ruled (in the 80's I believe) this is not the case. Craigslist managers are obligated to protect Craigslist as an artifical entity, collection of values, and network of relationships (of which the shareholders are an important but not exclusive group). And one of those collective values is a lack of agressive monitization.
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If they did issue 100% of the company, then CraigsList should have held a buy back to perform a reissue to new staff - that's precisely what my current employers recently did in order to give new Directors a share in the company.
Unless
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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 "styl
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This is EXTREMELY illegal, if done for reasons other than sound financial judgment (and I can't believe Craigslist has a legit reason for issuing more shares, if that is what they've been doing).
"We need to offer financial incentives to employees in order to attract the best employees in the competitive market of the Bay Area".
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.
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Re:A problem? (Score:5, Funny)
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Re:A problem? (Score:5, Funny)
Re:Ummm... unfairly? (Score:5, Informative)
The complaint is sealed, so we don't know exactly what it was. It *could* be something like the following: The stock is worth, say, $100 per share, and ebay owns about 28% of it. Craigslist decides to sell a bunch of shares to Craig at $50 per share. Ebay is hurt because the value of its investment went down, but the value to Craig went up. Basically, it's a breach of the company's duty to the minority stockholder. It has nothing to do with competition.
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ebay actually owns a minority interest in Craigslist. Minority shareholders are protected by the corporate laws of most states from abusive practices by the majority shareholders. In this case, ebay claims that the majority shareholders diluted the value of their shares in an unspecified way. Most likely, Craigslist issued additional shares of stock (thus reducing ebay's proportional ownership), or took property from the company in a way that reduced the value of ebay's investment.
Minority shareholders a
Re:Ummm... unfairly? (Score:4, Informative)
P.S. I'm not sure if you are trolling or not, but not everything can be so easily summed up by jumping to conclusions about evil corporations and their anti-competitive nature.
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Re:way to rock old news (Score:5, Funny)