Internet auctioneer eBay Inc. began reneging on its promises to Craigslist shortly after taking a minority interest in the online classifieds site, Craigslist founder Craig Newmark testified Thursday.
Newmark said he began having concerns about eBay within months of inking a deal in August 2004 that gave eBay a 28 percent stake in Craigslist. He testified in a lawsuit in which eBay claims he and Craigslist CEO James Buckmaster improperly acted to dilute eBay’s minority interest after a falling out in 2007.
EBay executives, including then-CEO Meg Whitman, indicated that they would be happy with holding a minority stake for several years, and that Craigslist would be eBay’s exclusive play in the online classifieds market, Newmark said.
Instead, eBay soon began pressing for a bigger stake in Craigslist and acquiring other online classified sites overseas.
“EBay, specifically Meg Whitman, made commitments and broke them,” Newmark said.
Newmark said he considered eBay’s insistence on acquiring more than 28 percent to be a deal breaker for Craigslist, which also had received overtures from Google Inc. and private equity firm Warburg Pincus. He said talks with eBay had “cratered” before he and Buckmaster were called to a meeting with Whitman in July 2004.
Whitman, who is seeking the GOP gubernatorial nomination in California, assured Craigslist that she was happy with a 28 percent share while the two companies went through a three-year “courtship,” Newmark testified. Whitman said the relationship would end amicably if it didn’t work, and reiterated that Craigslist was “the” play in classifieds for eBay, according to Newmark.
“We decided that eBay could be trusted, and we proceeded with the deal,” he said, adding that eBay executives assured him that they shared Craigslist’s community-oriented values.
But Newmark said no one at eBay, which is based in San Jose, California, informed him that the company was working to acquire online…