Facing a competitive threat from one of its own shareholders and board members, online classifieds site Craigslist was justified in adopting antitakeover measures to protect itself from eBay, Craigslist CEO James Buckmaster said Tuesday.
But under cross-examination from an eBay attorney, Buckmaster admitted that he made no effort to complain to eBay CEO Meg Whitman after eBay began acquiring several classifieds sites overseas and launched its own international classifieds site within months of taking a minority stake in Craigslist in 2004.
Not until eBay launched the U.S. version of its Kijiji classified site in 2007 did Buckmaster ask to end their relationship, a request that Whitman, now running for California governor, rejected.
"You were silent as the grave in terms of complaining to Meg Whitman, isn't that right?" eBay attorney Michael Rhodes asked Buckmaster, a key witness in eBay's lawsuit challenging steps that he and Craigslist founder Craig Newark took to dilute eBay's minority interest in their company.
Nevertheless, according to Rhodes, Buckmaster decided in January 2006 to stop providing Craigslist confidential financial information to which eBay was entitled after buying a 28 percent stake in the company in August 2004.
Craigslist officials also ignored eBay's invitation after the domestic launch of Kijiji to renegotiate their shareholders agreement before notifying eBay that it had violated an agreement not to compete in the U.S. in jobs postings, Rhodes said.
Buckmaster testified that after eBay launched Kijiji in the U.S. and bought online ads diverting Internet users looking for Craigslist to its own sites, it became clear that eBay was a threat.
"It seems to me they wanted to prosper Kijiji by harming Craigslist and Craigslist's users," he said.
Craigslist contends in defending against the lawsuit that eBay was out to control Craigslist, misused its confidential financial information, and reneged on its promise that Craigslist would be eBay's exclusive vehicle in the online classifieds market.
Buckmaster said he learned about the domestic version of Kijiji only days before its launch in a phone call from eBay executive Josh Silverman, who then resigned his position as eBay's representative on the Craigslist board of directors.
"It struck us as a little odd that he would immediately resign upon the launch of Kijiji," adding that no one at eBay ever offered an explanation for Silverman's resignation from the board.
Buckmaster said his concern grew when Internet ads began appearing with links to Craigslist that instead diverted users to eBay sites, a tactic that Buckmaster described as "tacky" and "an attack on Craigslist users."
"I felt we had a large, powerful, direct competitor shareholder who was badly conflicted," Buckmaster said.
"We were reminded oftentimes by eBay that we were mortals and they were not, and that they were prepared to wait us out until we were dead," he added.
Rhodes, the eBay attorney, pointed out that Buckmaster knew the antitakeover measures Craigslist was considering could result in a lawsuit by eBay, but that Buckmaster determined that the resulting "David versus Goliath" battle "could be good PR."
Rhodes then asked Buckmaster whether his "nasty and despicable" testimony the previous day was part of a public relations campaign by Craigslist. In that testimony, Buckmaster said he was warned by an eBay executive that there were "two Megs" a "good" one and an "evil" one.
"I don't recall saying anything nasty or despicable," Buckmaster said.