* EBay emails indicate they knew Kijiji launch sensitive
* Feign surprise if Craigslist balks, eBay exec wrote
By Alexandria Sage
SAN FRANCISCO, Dec 8 Emails from a top eBay Inc
(EBAY.O) executive showed the Internet giant was aware that a
competing online classifieds site it launched while sitting on
the board of Craigslist was a sensitive issue to be handled
delicately, according to court testimony on Tuesday.
EBay executives were told to feign surprise if Craigslist
executives were to react negatively to news that eBay was
launching its Kijiji classifieds site, one email showed.
The case surrounds eBay's minority stake in Craigslist, the
largest U.S. online classifieds site. EBay sued Craigslist in
Delaware in 2008, claiming the company diluted its stake from
28.4 percent to 24.85 percent, thereby denying eBay a seat on
its board. [ID:nN02322261]
Craigslist then sued eBay in San Francisco, claiming that
eBay used its board seat to glean confidential information that
it then used to launch its own classifieds business.
Former EBay executive Josh Silverman, who once ran the
company's international classifieds business and temporarily
sat on the board of Craigslist in 2007, took the stand in a
Delaware court on Tuesday, the second day of trial.
Emails presented during Silverman's cross examination
pointed to an awareness among eBay executives that the launch
of Kijiji could rattle Craigslist executives and compromise the
relationship between the two companies.
When eBay was deciding whether to launch a U.S. classifieds
site, executives distributed internal emails over the best
strategy to inform Craigslist.
Craigslist's attorneys showed in court an email sent to
Silverman in January 2007 from eBay's corporate counsel, Brian
Levey, that suggested Levey take Silverman's seat on the
Craigslist board to avoid any illusion of impropriety, given
the imminent launch of Kijiji.
"If we're going to compete, perhaps it's cleanest to have
me be the board member since they'd have a much tougher time
alleging that I'm using any confidential information to benefit
our business," wrote Levey.
"Right, that could be true. However I'd expect that we
would lose our Board seat right away, no?" responded Silverman,
according to the email shown in court.
An email sent in January by Silverman to another eBay
executive revealed Silverman's hesitancy to announce the launch
of Kijiji without first informing Craigslist.
"Do you have any more clarity around timing for making a
decision on a US entry into classified?" read the email. "I
wouldn't want to have a board meeting and then shortly after
announce an entry. Would look strange."
The court also saw an internal eBay email sent to Silverman
that discussed whether it was best for eBay, when talking to
Craigslist executives, to cast Kijiji as a "competitor" or
"complement" to Craigslist.
EBay ultimately informed Craigslist Chief Executive Jim
Buckmaster, in June 2007 of its decision to launch Kijiji.
Silverman summarized his June 19, 2007 phone call with
Buckmaster informing him of the competing launch in an email
titled "Talking Points for Call."
"I tried to present the information in a low-key and humble
manner ('with 29 free classified sites out there, we're not
saying that adding a 30th is going to have a huge impact,
especially given what great traction CL has ...')" read the
"I'd recommend that we continue the low key tone where we
don't expect them to be concerned or upset (and express
surprise if they do) and see how that plays out," according to
the email presented in court.
Silverman -- now the head of Web telephone company Skype,
which eBay recently sold -- did not deny the authenticity of
the emails presented in court.
In testimony, Silverman painted Craigslist as a company
with a culture vastly different from that of eBay, and said
Craigslist CEO Buckmaster and founder Craig Newmark did not
appear to want eBay's input into its business.
Former eBay Chief Executive Meg Whitman took the stand on
Monday, testifying that eBay was a "good partner" to Craigslist
and denying that eBay had tried to steal secrets from the
Newmark and Buckmaster are expected to testify on
(Reporting by Alexandria Sage; Additional reporting by
Thomas Hals; Editing by Richard Chang)