Craigslist accuses eBay of hypocrisy with lawsuit

By Adam Tanner

SAN FRANCISCO, May 1 (Reuters) - Popular online classified site Craigslist accused minority shareholder eBay Inc (EBAY.O: Quote, Profile, Research, Stock Buzz) on Thursday of suing Craiglist over the same business practices used by eBay itself.

EBay sued privately held Craigslist last week, alleging "clandestine" directors' meetings in recent months had diluted eBay's 28.4 percent stake to 24.85 percent. The lawsuit was unsealed on Wednesday.

"It's worth pointing out that eBay is suing us for implementing protections for Craigslist that it clearly believes are perfectly appropriate for protecting itself," Craigslist said in a posting on its blog site, here

Craigslist provided links to eBay filings in which eBay reserved the right to implement a poison pill, called for the company to pay legal fees if its officers were sued, and staggered board elections. EBay has raised all those issues in its filing against Craigslist in Delaware Chancery Court.

"There is a vast difference between the corporate governance of a public company with hundreds of thousands of shareholders and a private company controlled by two insiders with a single minority stockholder," eBay spokeswoman Kim Rubey said.

"Corporate measures applicable to public companies like eBay cannot easily be compared to measures at a company as closely held as Craigslist," Rubey added.

Both sites are leading engines of online commerce, but Craigslist has not followed the Silicon Valley script of raising billions of dollars by going public.

EBay bought its stake in 2004 when a Craigslist insider sold his shares. Company founder Craig Newmark, who says he sees no purpose in gathering more money than one person needs to live, has long said he does not want to sell Craigslist, which does not charge for most of its listings.