A Delaware lawsuit accuses him and Buckmaster of boardroom chicanery, an assertion they emphatically deny. Their accuser is eBay, which became a minority shareholder in 2004 with a stake of roughly 28%.
And while executives at Craigslist maintain that for many years he has not had a significant leadership role there, the eBay lawsuit describes Newmark, in addition to being a large shareholder, as chairman (the board has two members; it had been three).
The suit was set in motion by eBay’s decision to introduce a rival online classified site, Kijiji, in the US last year. Kijiji is already the market leader in Canada, Germany, Italy and Taiwan. EBay’s complaint contends that after the Kijiji move, Newmark and Buckmaster plotted in secret to dilute eBay’s influence in the firm, including an effort to deprive it of its board seat. The lawsuit asks the court to reverse those provisions.
Craigslist is expected to respond to the complaint this month, but on its blog it offered an assessment: “Sadly, we have an uncomfortably conflicted shareholder in our midst, one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits.”
The phrase “maximizing its own profits” broadly outlines the fight between the two firms. Despite its success, Craigslist prides itself on its grassroots instincts and user-based content. Even broad strategic decisions, such as which areas to expand into, are described as reflecting user requests made at online forums at the site.
As the complaint indicated, last year Buckmaster wrote to Meg Whitman, then the chief executive of eBay, saying, “We are no longer comfortable having eBay as a shareholder, and wish to explore options for our repurchase, or for otherwise finding a new home for these shares.”
In an email message of its own, eBay emphasized that the two firms would remain joined. “We would obviously prefer to see this resolved without litigation,” eBay wrote. “With that said, we will only accept a resolution that preserves our rights and the full value of our investment in Craigslist. We will continue to act openly and in good faith as a minority shareholder.”
The competition between the firms is also heating up outside court. EBay has recently sent email messages to its users promoting Kijiji, and Craigslist in the last few weeks has added 120 cities, half of them overseas, where Kijiji has been dominant.
The websites’ expansion comes as newspapers are experiencing a steep downturn in classified advertising. Print classified advertising declined 16% last year, to $14.2 billion, according to the Newspaper Association of America, below the 1996 level, even without adjusting for inflation.
In this straitened market, Craigslist becomes shorthand for the threat that online advertising outlets are seen as posing to newspapers.
Buckmaster responds by saying Craigslist has no sales force and has not sought to win over newspaper advertisers, in contrast to firms such as the job listing site Monster.