Craigslist v eBay : Deceptive Google Ads Used By eBay

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Craigslist v eBay: Craigslist Fights Back

Ebay sued Craigslist some time ago, suggesting that the site had engaged in anti-competitive practices. Craigslist has decided to fight back with a counter lawsuit.

Writing at the Craigslist blog, Jim Buckmaster, CEO of Craigslist, says:

We filed a complaint in California today, charging eBay with unlawful and unfair competition, misappropriation of proprietary information, deceptive passing-off, business interference, false advertising, phishing attacks, free-riding, trademark infringement, trademark dilution, and breaches of fiduciary duty.

We respectfully ask the Superior Court in San Francisco to enjoin this conduct and order eBay to (1) make full restitution to craigslist, (2) disgorge their related profits (3) restore to craigslist all shares of the company acquired by means of, or for the purpose of unfair competition, and (4) pay punitive damages for their malicious behavior.

Ouch!

See: Deceptive Google ads used by eBay to channel traffic from Craigslist to eBay's Kijiji per court documents.

Ebay v. Craigslist: Details Are Now Public

Ebay has released details of its complaint against Craigslist, somewhat ironically a company in which Ebay has a substantial equity stake. That equity is critical to the lawsuit, which in a nutshell is about how Craigslist responded to Ebay's entry into the classified market with their listings website called Kijiji. That response was a reorganization that effectively took away Ebay's right to have a seat on the Craigslist board due to stock dilution.

New York Times Summary

Ebay Complaint

Craigslist Hits Back At eBay

Craigslist has responded to eBay's lawsuit filed against Craigslist and its board of directors.

We are surprised and disappointed by eBay’s unfounded allegations, which came to us out of the blue, without any attempt to engage in a dialogue with us.

Coming from a shareholder that views craigslist as a prime competitor, filing suit without so much as mentioning these assertions beforehand seems unethical, and hints at ulterior motives.

Ensuring the future well-being of craigslist and the craigslist community is admittedly very important to us. But Ebay has absolutely no reason to feel threatened here — unless of course they’re contemplating a hostile takeover of craigslist, or the sale of Ebay’s stake in craigslist to an unfriendly party. (In which case, they’re out of luck).

For our part, we have always treated eBay very fairly as a minority shareholder, and plan to continue doing so, despite this unfortunate development.

Addendum in response to commenter question - To be perfectly clear, eBay’s stake in craigslist has not been unfairly diluted as they have claimed.

What Is Craigslist's Valuation

Henry Blodget has done some great analysis on the valuation of Craigslist.com which he pegs at around $5 billon. I asked Craig some questions at the Web 2.0 Conference and Expo in January to come up with a valuation. Here is my take base on my discussion with Craig:

Pageviews
Craig said that they are doing about 10 billion pageviews a month.

Bandwidth
I figure given Craigslists traffic they would get preferential committed rates for bandwidth and I would guess based on my experience that it about $1 million a month or $10-15 million a year.

Web Site
The site is written in perl and java and runs on linux. The design has not changed much since the beginning and there are no plans to do so said Craig. He also did not want to elaborate on the infrastructure roll outs, maintenance or the number of people involved with that part of the operation but I suspect they have 5-7 people doing that. I also would also make an educated guess that they are rolling out 5-10 servers a week to keep up with demand.

Server Costs
I guess monthly replacement costs to be $100,000 per month and actual physical hosting could be as high as $1 million per month. I could be off base here. So the total would be about $10-15 million.

Total Operation Costs
I figure total data center operation costs to be $15-30 million. Employee costs I would guess at $5-6 million for 25 employees. So the total costs would be $20-35 million.

Revenue
I asked Craig about this too and did not want to elaborate. However a rough calculation taking into account the fees for job posts and apartment listings in the various cities works out to about $1-1.5 million per week or $78 million for the year.

Valuation
What valuation would a public company generating revenues of $78 million less operational costs of $30 million (range is $20-35 million) with no debt, that has a 30% growth rate get? It is not unusual to see trailing P/Es in the mid 30's. eBay has a P/E of 125 and Yahoo has a P/E of 60. Based on these number Craigslist could be worth $2-6 billion.

Disclosure: Craigslist won the award for Best Online Community Website

Craigslist Prank Listings Lead To Major Theft

Jacksonville, Oregon:

Two classified advertisements appeared on Craigslist Saturday stating that all the belongings of a home in Jacksonville, Oregon would be free for the taking, including a horse, because the owner had to leave the area immediately.

Unfortunately the owner of the property and the horse, Robert Salisbury, had no intention of giving away his property but was away from the house when dozens of people started to arrive at his house, rummaged through his belongings, and took the horse, ladders, landscape equipment, and other property valued at thousands of dollars.

Incredibly, Salisbury reports that he confronted some of the 30 some people he found on his property after returning home and many refused to stop the scavenging, insisting that the Craigslist advertisement somehow gave them the right to continue.

Fortunately for Salisbury, the woman who took the horse for humane reasons suspected something was strange about the circumstances, left a note, and contacted local police.

Salisbury collected the license numbers of those leaving his land with his property, and local police have opened an investigation into the case, perhaps one of the most flagrant cases of people believing what they read on the internet in defiance of their own common sense.

Source: Chris Conrad, Medford Mail Tribune.

Craigslist wins discrimination lawsuit

An Illinois Court ruled yesterday in favor of Craigslist in a suit that contended that Craiglist was liable for the content of some of the real estate listings on Craigslist. The plaintiff maintained that Craigslist's failure to police the listings violated the Fair Housing Act because they included notes such as "no minorities" or "no children".

The Judge maintained that Craigslist was not obligated to police these listings, citing other decisions that have protected information intermediaries from being held liable for the content of posts to their sites or forums.

Here is the Illinois Court ruling in CHICAGO LAWYERS’ COMMITTEE FOR CIVIL RIGHTS
UNDER LAW, INC., v Craigslist, Inc.

crgslst Searches Craigslist

crgslst announced the launch of a slick multi-city search tool for Craigslist. Craigslist presently does not have a multi-search service. The tool combines RSS feeds from Craigslist with AJAX to populate the search fields. Housing Maps, does a similar thing, the site displays the apartment listings on Craigslist using Google Maps.

Second Keynote Speaker For Conference - Craig Newmark, Craigslist Founder

Craig Newmark, Founder of Craigslist will be the second headline Keynote Speaker at the upcoming WebGuild Web 2.0 Conference & Expo on Tuesday, January 29, 2008.

We all know Craigslist which is described as a centralized network of online communities, featuring free classified advertisements (with jobs, internships, housing, personals, for sale/barter/wanted, services, community, gigs, resume, and pets categories) and forums on various topics. Craig, himself, is a web-oriented software engineer by training, with 30 years of IT experience at companies such as IBM and Bank of America, Craig now spends his days working as a customer service rep at Craigslist.

In 1995 while Craig was working at Schwab, he started craigslist as an email list for friends and co-workers about events going on in the San Francisco Bay Area. In 1999, Craig retired from IT consulting to work full-time on Craigslist. What started as a fun side project in Craig's living room has since grown into one of the busiest sites on the internet, helping people with basic day-to-day needs such as finding a job, an apartment and a date, all within a culture of trust. Craig continues to embrace his inner nerd though he no longer wears thick black glasses that are held together with tape, and he retired the plastic pocket protector some years ago.

Craig is involved with a variety of community efforts and is particularly interested in organizations promoting public diplomacy, mideast peace and new forms of media such as participatory journalism. He's on the boards of Sunlight Foundation, OneVoice, FactCheckED, and VotoLatino. Craig graduated from Case Western University.

Don't miss his keynote! Gil Penchina, CEO of Wikia will be the first Keynote.

Search Rankings For September 2007

comScore, Inc. (Nasdaq: SCOR), released its monthly comScore qSearch analysis of the U.S. search marketplace for September 2007. Google remained the top search property with more than 5.3 billion core searches conducted, representing a 57% share of the search market, followed by Yahoo! 23.7%, Microsoft 10.3%, Ask.com 4.7% and Time Warner Network 4.3 %.

comScore qSearch 2.0 Report - Total U.S. Home/Work/University Location

Share of Searches (%)

Search Entity                       Aug-07          Sep-07     Sep vs. Aug
Total Core Search                   100.0%          100.0%        0.0
Google Sites                         56.5%           57.0%        0.5
Yahoo! Sites                         23.3%           23.7%        0.4
Microsoft Sites                      11.3%           10.3%       -1.0
Ask Network                           4.5%            4.7%        0.2
Time Warner  Network                  4.5%            4.3%       -0.2

* Based on the five major search engines including partner searches and cross-channel searches. Searches for mapping, local directory, and user-generated video sites that are not on the core domain of the five search engines are not included in the core search numbers.

September U.S. Expanded Search Rankings

In the September 2007 analysis of the Top 50 properties worldwide where search activity is observed, Google Sites led the pack with 6.6 billion searches. Yahoo! Sites ranked second with nearly 2.4 billion searches, followed by Microsoft Sites (999 million), Time Warner Network (843 million) and Fox Interactive Media (492 million). Despite the decline in overall search activity in September, Ask.com saw a 10-percent gain versus August.

Expanded Search Query Report - Total U.S. Home/Work/University Locations

Search Queries (MM)

Expanded Search Entity             Aug-07          Sep-07      Sep vs. Aug
Total Expanded Search              13,703          13,018        -5.0%
Google Sites                        6,809           6,593        -3.2%
Google                              5,602           5,388        -3.8%
YouTube/All Other                   1,207           1,205        -0.2%
Yahoo! Sites                        2,473           2,381        -3.7%
Yahoo!                              2,438           2,346        -3.8%
All Other                              35              35         0.0%
Microsoft Sites                     1,144             999       -12.7%
MSN-Windows Live                    1,111             966       -13.1%
Microsoft/All Other                    33              33         0.0%
Time Warner Network                   937             843       -10.0%
AOL                                   438             397        -9.4%
Mapquest/All Other                    499             446       -10.6%
Fox Interactive Media                 571             492       -13.8%
MySpace                               560             483       -13.8%
All Other                              11               9       -18.2%
eBay                                  457             445        -2.6%
Ask Network                           439             445         1.4%
Ask.com                               205             226        10.2%
MyWebSearch.com/ All Other            234             219        -6.4%
CRAIGSLIST.ORG                        199             197        -1.0%
Amazon Sites                          154             138       -10.4%
Comcast Corporation                    73              65       -11.0%