A confidential settlement has ended a longstanding legal battle between auction giant eBay and listings company Craigslist, according to an announcement from eBay this Friday.
Craigslist has reacquired all its equity interest after eBay sold its 28.4 percent stake of Craigslist back to the online-classified website, dismissing all the lawsuits between the two companies. EBay did not disclose the financial terms and declined to comment any further.
EBay acquired the equity interest, valued between $12 million and $15 million, from a former Craigslist employee back in 2004. The deal paved the way for eBay's close-up view of the expanding Craigslist's online-classified business.
However, when eBay introduced Kijiji as its classified service in the United States instead of Craigslist, the listings company resorted to changing eBay's shareholder plan, reducing its stake from 28.4 percent to 24.9 percent, which resulted in eBay's difficulty in selling back its share.
Craigslist demanded that eBay should return the shares it acquired in 2004 after it launched a rival in the form of Kijiji. The partnership between the two companies dissolved quickly and eBay filed a lawsuit against Craigslist for its equity interest in 2008, while Craigslist countersued eBay for allegedly stealing confidential information, breaches of fiduciary duty and trademark infringement.
In 2010, eBay won the case against Craigslist when the judge ruled that CEO Jim Buckmaster and Craigslist founder Craig Newmark violated their accountabilities to eBay when Craigslist diluted the e-commerce company's share. In 2011, when the legal drama was believed to be finished, U.S. prosecutors initiated a criminal probe to check whether eBay indeed stole confidential information from the San Francisco-based Craigslist as it created its competitor Kijiji, which was renamed later as EbayClassifieds.com.
The Craigslist website currently ranks eighth in terms of traffic in the U.S., one place behind eBay, based on the reports of Amazon's Alexa.com, a research service.
The truce is very timely as San Jose, California-based company eBay prepares for restructuring, with its upcoming split from the payments group PayPal set to happen in the third quarter of this year. As the company focuses on its online marketplace, it is reportedly trying to sell its eBay Enterprise division, which manages customer support, warehousing, and delivery to online merchants.
Shares in eBay Inc. rose less than 1 percent to close the trading at $61.17.
Craigslist quoted Shakespeare's "All's Well That Ends Well" in the company's blog post about the settlement.
Photo: Anne Cloudman | Flickr
