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Testimony spills messy details in eBay-Craigslist squabble

Treachery and double-dealing all around

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The founder of Craigslist has admitted that eBay was free to compete with his website under terms of a contract both parties signed, numerous news outlets reported Friday.

Craig Newmark also said the online auction house was permitted to access Craigslist confidential data "with some limitations."

The admissions, made during sworn testimony in a Delaware court, come as Craigslist and eBay trade accusations of treachery and double-dealing in a 2004 transaction in which eBay acquired a 28-percent stake in the classifieds website. Craigslist has claimed eBay misused proprietary information it obtained from the purchase to develop Kijiji, a competing online classifieds site.

"If it ain't in the document, you don't get to rely on it, right?" an attorney for eBay asked Newmark during cross examination, according to this account from the Associated Press.

"That's what these documents say," Newmark replied.

The testimony came in a suit eBay filed that alleges Newmark and Craigslist CEO Jim Buckmaster - who together hold a majority stake in the classifieds site - set out to unfairly dilute eBay's holdings. The dilution caused eBay to lose its right to elect a Craigslist board member, the auction house said.

The disputes have aired the messy details of a family squabble that members surely would have preferred remained private. After eBay disclosed its plans to launch Kijiji, Newmark said, "My concern was that we were now beginning to see evidence that Meg was not trustworthy," a reference to then eBay CEO Meg Whitman, who is now running for California governor.

Whitman testified earlier that eBay had hoped to form a bond with Newmark and Buckmaster and eventually convince them to sell the Craigslist outright. Within a year, the two sides had a falling out, according to emails presented, with eBay executives mocking the Craigslist bosses for "amateurish board meetings" and an inability to use PowerPoint.

Other emails showed that eBay executives thought the launch of Kijiji would violate provisions of their shareholder agreements. Executives expected to lose their seat on the Craigslist board as a result.

The dispute also dropped this one tidbit: Google made overtures to acquire the 28-percent stake.

Additional coverage from Dow Jones and Reuters are here and here. ®

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