Craigslist-founder felt "betrayed" by eBay

 

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By Reuters

Posted on 11 Dec 2009 at 10:15

Craigslist-founder Craig Newmark has testified that he felt "betrayed", when eBay decided to launch its rival social-networking site Kijiji.

Newmark claimed that he decided to allow eBay to buy into his company after attending a meeting with former CEO Meg Whitman in 2004.

"She insisted that she was very happy at that point in time moving forward with a 28 percent share of Craigslist," testified Newmark. "She insisted convincingly that she shared our values and what she said was real. She'd follow through on that."

"We decided eBay could be trusted and we proceeded with the deal," he added, before claiming that Whitman told him that Craigslist was "the play in classifieds" and said the companies would "part amicably" if the partnership did not work.

Whitman insisted convincingly that she shared our values and what she said was real

He went on to compare his feelings to that of a cheated spouse when he later learned that eBay had launched a rival online classifieds site, Kijiji.

"EBay, specifically Meg Whitman, made commitments and broke them," he said. "Basically this is the equivalent of a 'Dear John' letter. You thought you were dating and they show up with someone else."

Newmark took the stand in Delaware's Court of Chancery to defend the online classified ads company against accusations that it later unfairly diluted eBay's stake in Craigslist to 24.85% and stripped it of a board seat.

Craigslist has meanwhile sued eBay in San Francisco, claiming the larger rival never disclosed its intentions in creating its own classified site and used its board seat to glean information for developing Kijiji.

EBay is fighting to reinstate its full stake and board seat. However, since the lawsuits were filed, eBay has vowed publicly to overtake Craigslist's dominance in online classifieds in the US.

Testimony from the trial has revealed a clash of cultures between Craigslist, known for its anti-corporate culture, and eBay, whose executives took the stand and mocked Craigslist executives for their "amateurish board meetings" and inability to use Power Point.

Newmark, who described himself as "not that comfortable with luxury" says that eBay founder Pierre Omidyar once joined him for a board meeting at a San Francisco restaurant that Newmark described as "way too fancy for my taste."

Under cross examination, attorneys for eBay sought to shed doubt on Newmark's integrity, questioning him repeatedly about an $8 million payment he took as part of eBay's investment but did not disclose to the Craigslist community.

Earlier Thursday, Price -- who was eBay's principal deal maker in acquiring its $32 million stake in Craigslist -- said the decision to buy a stake in Craigslist was partly to block a sale to Google Inc.