By Tom Hals and Alexandria Sage
WILMINGTON, Del./SAN FRANCISCO, Dec 15 (Reuters) - The head of Craigslist acknowledged on Tuesday that he had a verbal 'gentlemen's agreement' with his counterpart at eBay Inc to amicably part ways, but not a written contract.
Craigslist CEO Jim Buckmaster told Delaware Chancery Court that any assurance by former eBay CEO Meg Whitman that the two parties could 'gently unwind' their partnership never made it into print after eBay took a minority stake in 2004.
'When you signed the contract you subjectively knew these assurances were not in the contract right?' asked Michael Rhodes of Cooley Godward Kronish, which represents eBay.
'I understood some of them were not,' said Buckmaster, adding he understood that the parties would rely on a 'gentlemen's agreement' should the relationship sour.
Rhodes referred to such an agreement as 'amorphous CEO-to-CEO' contact.
Buckmaster testified that Whitman, who is running for governor of California, made it a point of honor that there would be a way out.
'What she said was ... we could rely on her word that should we grow uncomfortable, we would find a way to rewind the transaction so the two parties could go their two separate ways,' he said.
EBay sued Craigslist last year, claiming that Buckmaster hatched a 'coercive plan' that diluted eBay's stake to 24.85 percent from 28.4 percent, and eliminated its board seat.
The move came after eBay launched the Kijiji online classified business in 2007 in the United States, where Craigslist is the dominant player.
Craigslist, meanwhile, has sued eBay in San Francisco, saying the larger rival used its board seat to glean confidential information about the classified ad business.
EBay is hoping to restore its board seat and full stake in Craigslist. A ruling on the case may come as early as January.
AD CONFLICT
Earlier in the day, Buckmaster described to the court the pressure he felt to act after he became aware of Google ads posted by eBay that advertised Craigslist but diverted web users to Kijiji.
'These text ads were what I felt was a very vivid illustration of the mind-set of eBay at this time,' he said. 'It seemed to me they were of the mind-set of pushing Kijiji by harming Craigslist and Craigslist users.'
He said he felt forced to adopt corporate governance changes to protect the company. Those steps effectively diluted eBay's stake in the company in January 2008.
The trial, which is in its seventh day, has been a study in clashing cultures.
EBay moved quickly after buying its stake from a disgruntled Craigslist employee to try to make money off the classified ads business. In contrast, Buckmaster and Craigslist founder Craig Newmark talked of letting their community of users guide their decisions.
On Monday, Buckmaster said he had been warned that Whitman was being 'driven to distraction' because the two companies had not reached a deal to jointly launch a classified service in Europe by early 2005.
Buckmaster said eBay's dealmaker, Garrett Price, told him Whitman had an 'evil' side and could be a 'monster' when angered and frustrated. EBay's Price said in a statement that Buckmaster's comments were 'false and malicious.'
Craigslist called Craigslist attorney Ed Wes as its last witness. The trial is taking place in Delaware, where Craigslist is incorporated, and is broadcast over Courtroom View Network.
The case is eBay Domestic Holdings Inc v Newmark, et al, Delaware Chancery Court, No. 3705-CC.
(Editing by Michele Gershberg; editing by Carol Bishopric)
((thomas.hals@thomsonreuters.com, +1-302-993-6283; Reuters Messaging: thomas.hals.reuters.com@reuters.net)) Keywords: EBAY/CRAIGSLIST (See http://blogs.reuters.com/shop-talk/ for Shop Talk -- Reuters' retail and consumer blog.) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WILMINGTON, Del./SAN FRANCISCO, Dec 15 (Reuters) - The head of Craigslist acknowledged on Tuesday that he had a verbal 'gentlemen's agreement' with his counterpart at eBay Inc to amicably part ways, but not a written contract.
Craigslist CEO Jim Buckmaster told Delaware Chancery Court that any assurance by former eBay CEO Meg Whitman that the two parties could 'gently unwind' their partnership never made it into print after eBay took a minority stake in 2004.
'When you signed the contract you subjectively knew these assurances were not in the contract right?' asked Michael Rhodes of Cooley Godward Kronish, which represents eBay.
'I understood some of them were not,' said Buckmaster, adding he understood that the parties would rely on a 'gentlemen's agreement' should the relationship sour.
Rhodes referred to such an agreement as 'amorphous CEO-to-CEO' contact.
Buckmaster testified that Whitman, who is running for governor of California, made it a point of honor that there would be a way out.
'What she said was ... we could rely on her word that should we grow uncomfortable, we would find a way to rewind the transaction so the two parties could go their two separate ways,' he said.
EBay sued Craigslist last year, claiming that Buckmaster hatched a 'coercive plan' that diluted eBay's stake to 24.85 percent from 28.4 percent, and eliminated its board seat.
The move came after eBay launched the Kijiji online classified business in 2007 in the United States, where Craigslist is the dominant player.
Craigslist, meanwhile, has sued eBay in San Francisco, saying the larger rival used its board seat to glean confidential information about the classified ad business.
EBay is hoping to restore its board seat and full stake in Craigslist. A ruling on the case may come as early as January.
AD CONFLICT
Earlier in the day, Buckmaster described to the court the pressure he felt to act after he became aware of Google ads posted by eBay that advertised Craigslist but diverted web users to Kijiji.
'These text ads were what I felt was a very vivid illustration of the mind-set of eBay at this time,' he said. 'It seemed to me they were of the mind-set of pushing Kijiji by harming Craigslist and Craigslist users.'
He said he felt forced to adopt corporate governance changes to protect the company. Those steps effectively diluted eBay's stake in the company in January 2008.
The trial, which is in its seventh day, has been a study in clashing cultures.
EBay moved quickly after buying its stake from a disgruntled Craigslist employee to try to make money off the classified ads business. In contrast, Buckmaster and Craigslist founder Craig Newmark talked of letting their community of users guide their decisions.
On Monday, Buckmaster said he had been warned that Whitman was being 'driven to distraction' because the two companies had not reached a deal to jointly launch a classified service in Europe by early 2005.
Buckmaster said eBay's dealmaker, Garrett Price, told him Whitman had an 'evil' side and could be a 'monster' when angered and frustrated. EBay's Price said in a statement that Buckmaster's comments were 'false and malicious.'
Craigslist called Craigslist attorney Ed Wes as its last witness. The trial is taking place in Delaware, where Craigslist is incorporated, and is broadcast over Courtroom View Network.
The case is eBay Domestic Holdings Inc v Newmark, et al, Delaware Chancery Court, No. 3705-CC.
(Editing by Michele Gershberg; editing by Carol Bishopric)
((thomas.hals@thomsonreuters.com, +1-302-993-6283; Reuters Messaging: thomas.hals.reuters.com@reuters.net)) Keywords: EBAY/CRAIGSLIST (See http://blogs.reuters.com/shop-talk/ for Shop Talk -- Reuters' retail and consumer blog.) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.