eBay acquired a 28 percent share of the Craigslist online classified site in 2004, and then proceeded to launch its own competing classifieds site Kijiji in 2005. It has been less than a “marriage made in heaven,” with things coming to a head when eBay launched Kijiji in the U.S. in 2007. The two parties have sued each other and accusations have gotten rather nasty.
Given the strained relationship between the two companies, what if eBay gave up its share in Craigslist and donated it to charity? It’s not really such a radical solution to the ongoing dispute between the two companies in which Craigslist accuses eBay of extracting confidential information to help it launch a competing site.
eBay covets Craigslist users, and at a spring meeting with Wall Street analysts, told of its desire to transform eBay into a multi-format shopping portal that would include classifieds on eBay. eBay may believe that beefing up its classifieds format could also help it reconnect with small sellers who have felt alienated as it pursues brand-name retailers and manufacturers.
There has also been speculation that eBay might rename Kijiji in the U.S. to “eBay Classifieds” after eBay revealed it was running localized tests earlier this year. (No wonder Craigslist is peeved.)
eBay founder and Chairman of the Board Pierre Omidyar is a philanthropically-minded fellow, according to his Venture Capital company Omidyar Network, and ditto for Craigslist founder Craig Newmark. Could either of them really have a problem with a non-profit organization like Goodwill owning the 28 percent of Craigslist that eBay currently owns?
If eBay’s Kijiji is not directly benefiting from its parent owning part of Craigslist, it has nothing to lose. Shareholders would benefit from the tax benefit of the charitable donation, and eBay would not be bogged down with ongoing litigation. Shareholders could feel comforted knowing those shares could never be placed in the hands of an eBay competitor.
And if eBay is misappropriating proprietary information to unfairly compete, as Craigslist has complained, then Omidyar should put a stop to it, and what better, quicker and easier way is there than showing some “Goodwill”? eBay could get on with competing with Craigslist with no accusations of anti-competitive behavior hanging over its head, and Craigslist could go on with its business as well.
By Ina Steiner
August 28, 2009