eBay says payment to Craigslist for rights was 'extortion'By Jerry A. DiColo; Dow Jones Newswires2009-12-10 09:37 by Philip Tags: eBay, Craigslist
Online auction firm paid $16 million for rights related to stake in classified Website. An eBay Inc. executive said a $16 million payment to Craigslist's controlling shareholders for certain rights related to eBay's stake in the online classified-ads site was essentially extortion for a chance to invest in the company. In Delaware Chancery court Wednesday, Garrett Price, the lead negotiator in eBay's 2004 bid to invest in Craigslist, said the majority shareholders, founder Craig Newmark and Chief Executive Jim Buckmaster, asked to have the payment kept quiet so as not to tarnish the public image of the company. "I would consider the payment an extortion," Price said on the witness stand. EBay and Craigslist are fighting over the size of the ecommerce giant's minority stake in the online classified-ads leader, and whether Craigslist improperly took action to reduce eBay's stake and remove the company's representative from the board. EBay paid $32 million for 28% of Craigslist's privately held shares, held at the time by an early Craigslist employee, Phillip Knowlton. EBay paid $16 million to Knowlton, with the rest of the payment distributed, through a special dividend, to Newmark and Buckmaster. San Francisco-based Craigslist has filed a countersuit alleging that eBay took advantage of its investment to steal confidential information that it used to create Kijiji. In earlier testimony, Brian Levey, eBay's deputy counsel, said under cross-examination that some confidential data were used by eBay when launching a competing site. Read more -here-
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