Ebay and Craigslist Duke it Out in Federal Court: Classified Ads War Heats Up

Keep your friends close, but your enemies closer… Or legally own shares, take confidential information as a board member, and set-up a rival organization with the same business model. This is why Craigslist is so furious about particular eBay employees.

The saga that has long been brewing surfaced to the mainstream of lawsuit parades along the Internet battlegrounds. Now, a federal grand jury has come into the picture and launched a probe to investigate Craigslist’s allegations over eBay’s unfair use of confidential data prior to building its own classified site, Kijiji (or more commonly recognized as ebayclassifieds.com.)

While Craigslist reps refuse to air their piece as of this time, eBay spokeswoman Amanda Miller shared the company’s take on this legal battle via an email. A parcel of the statement was read on Reuters: “EBay believes that Craigslist’s allegations against eBay are without merit. We will continue to vigorously defend ourselves, and we will aggressively pursue our claims against Craigslist.”

Macroscopically-speaking, it looks as if eBay deliberately bought 28 plus percent shares of Craigslist just to gather material to power up Kijiji. However, when you dig a little deeper into the business cores of the two, there are quite a number of overlaps that may have caused the collision.

Overlap Number 1: Social Media and Crowdsourcing Expansion

Classified ads have been Craigslist’s bread and butter for the longest time now. And then comes the report of expansion by Tom Forenski of SiliconANGLE.com in March, which was triggered by the company moving to a bigger office space. This news went out following Craig Newmark’s (the Craig in Craigslist) pronouncement of his new venture that involves social media and crowdsourcing philanthropy. Although this may sound a charitable act, experts eyes see this as a tactic to gain more grassroot exposure and perhaps magnify its current network for future funding. Social media is something that eBay has vastly explored to increase traction primarily for their auction business.

Overlap Number 2: The Ultimate Classified Ads Fender-bender

Both are leaders in their own fields: Craigslist at the frontier of the billion-dollar classified ads sector and eBay still dominating the auction bay with over 1 billion transactions daily. In fact, recent financial performance indicated the buy and sell site remained strong because of healthy influx of revenues, despite profits falling flat. Craigslist’s success could have attracted eBay to enter the classified ads business in 2007—an arena which has been owned by Craig and company since 1995. Having an opponent inside the board is something that Craigslist became truly alarmed of, and magnitude of worry mounted as Kijiji surfaced few years ago.

The present war being waged comes as unsurprising as titans thrusting their enterprises in parallel directions, odd as it sounds, will meet somewhere along the federal court’s road. Should Craigslist’s accusations prove true, how will they keep themselves protected when eBay still holds significant shares of the company? And what if eBay proves Crasiglist wrong, how will the latter prepare for former’s revenge?