EBay CEO Donahoe Doesn’t Make Much of Craigslist Criminal Probe

When news of a criminal probe into dealings between eBay employees and Craigslist surfaced last month, it “came out of the blue,” said eBay CEO John Donahoe on Wednesday.

A leaked grand jury subpoena last month named several eBay employees, including Chairman Pierre Omidyar, and indicated that federal investigators were looking into whether or not they had misappropriated confidential information from online classifieds site Craigslist in order to help build eBay’s own online classifieds service.

“It was a media cycle for a day,” Donahoe said of the news, while chatting on the sidelines of an eBay developer conference in San Francisco.

EBay’s relationship with Craigslist has long been contentious. EBay bought a large ownership stake in Craigslist in 2004, but Craigslist never seemed to quite take to its new, larger corporate partner.

EBay sued Craigslist in 2008, alleging that the company sought to unfairly dilute eBay’s ownership stake. That suit ended with eBay having its stake restored, but also losing its Craigslist board seat. Craigslist has meanwhile fired back with its own lawsuit alleging that eBay stole information used to build what’s now known as eBay Classifieds.

Donahoe said eBay’s classifieds business has proven highly successful in many overseas markets. “We are the Craigslist in the U.K.,” he said, before going through a list of other countries where he says a similar situation exists.

Donahoe said eBay isn’t thinking about selling its Craigslist stake. “I would consider it a passive investment,” the CEO said, “There’s not really an active market to buy or to sell.”

He also suggested that Craigslist has hit something of a lull. “In some ways Craigslist today reminds me of eBay five years ago or six years ago,” Donahoe said, noting that prior to 2008, “eBay started looking a little bit tired, we didn’t keep up with innovation.”

According to a study published by Advanced Interactive Media Group last week, Craigslist may see revenue fall 5% to $115 million this year, compared to $121 million in 2010. Sales and profits have never been a big focus for Craigslist.

In a recent interview with The Guardian, Craigslist Chief Executive Jim Buckmaster sought to distinguish the site, which has changed little in appearance during the past decade, from businesses that place an “emphasis on revenue maximization.”

A Craigslist spokeswoman declined to comment.

source: blogs.wsj.com