eBay vs. Craigslist, Round One: eBay's Version

After last week's news of eBay suing Craigslist, a company in whose ownership it has an important stake, eBay has decided to let the world know why exactly they're suing, and published a copy of its complaint.

This is eBay's version of the story, so it's obviously a bit biased towards them, but even now it's apparent that Craigslist has had good reasons for what they've done.

In a nutshell, eBay really wants to buy Craigslist, and it bought a significant stake in the company - 28.4% back in 2004. The two companies have made an agreement which states that, should they start competing with each other, each company has the right to resell shares without a ROFR. This is where it gets interesting, because eBay did launch a competitor; an international classifieds site Kijiji. And although eBay had tried to prove that Kijiji is a completely separate affair from Craigslist, the folks at Craigslist exercised a number of measures to reduce eBay's stake in the company; most importantly, they've diluted their shares with a poison pill and pushed eBay below the 25% (24,85%, to be exact) threshold of ownership, which means that eBay cannot put a new member into Craigslist's board of directors.

Basically, Craigslist is squeezing them out, and eBay doesn't like it one bit. However, has Craigslist acted in accordance with the two companies' previous agreement? I'm sure that their side - which we'll inevitably hear really soon - will shed some additional light to this story.