Craigslist vs. eBay: Internet giants take each other on in Delaware courtroom

The World Wide Web may be a recent invention, but the reason two pioneering Internet sites are facing off in a legal battle is as old as commerce itself -- a business deal gone sour. How much power eBay has on Craiglist's board of directors is the issue being hammered out in a Delaware courtroom in a trial that began Monday.

The conflict centers on whether executives at privately held Craigslist improperly reduced eBay's (EBAY) significant interest in their company through a series of secret deals. The case dates back to 2004 when eBay bought a stake in Craigslist. Ebay has since sought to gain a seat on the board for its 28.4% share, only to learn it has been diluted to just 25%, a level that doesn't entitle eBay to representation.
Craigslist has argued it took the action to thwart any attempt of a hostile takeover of the company. It has also fired back by counter-suing in a California court, claiming that eBay illegally used its contacts at Craigslist to introduce a U.S. version of, a Craigslist competitor whose users number some 1.7 million. Craigslist has 22.2 million users, Bloomberg News reported, citing 2008 data from Florida-based Classified Intelligence.

Those testifying in the anticipated week-long trial include former eBay CEO Meg Whitman, now a candidate for governor in California where both companies are based, along with the e-commerce site's founder Pierre Omidyar, according to Bloomberg. Also expected to take the stand is Craig Newmark, Craigslist's outspoken founder and chairman, and CEO James Buckmaster -- the company's only board members.

Shares of eBay (EBAY) were lower by 9 cents to $23.60 in noontime Nasdaq Stock Market trading. The stock has climbed 69% this year.
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