Craigslist Unravelling at the Seams
Extortion Drama: Nails in the Craigslist Coffin?
Did Craigslist founders, Newmark and Buckmaster, welch on a deal with eBay, their largest stockholder, and then extort millions from them? It looks like the answer is “you bet they did”!
At this point, both sides are waiting for a Deleware judge’s decision while concurrently preparing for another round in a California court.
Let’s review the highlights:
· The two companies have been in court now for months. eBay’s biggest contention is that Craigslist promised eBay a board position in return for their significant investment (28% of the company’s stock), and then later reneged on the deal.
· eBay’s Garret Price told the court that Newmark and Buckmaster “extorted “ $16 million from eBay, and tried to keep this a secret, lest it damage the company’s image.
· The ensuing legal action by both companies has been called “a dysfunctional… relationship drama better than a nasty divorce case” by NBC Chicago’s Jackson West. Even eBay’s ex-CEO Meg Whitman, currently a candidate for California governor, has taken the stand. This is probably the worst beating to Craigslist’s reputation in recent memory, despite the fact that they are constantly embroiled in criminal investigations across the country.
Craigslist’s reputation seems to continue to spiral downward. According to CNN, an increasing number of people are avoiding the site because they regard it as unsafe – and with good reason.
Despite the efforts of law officials, from community police to federal investigators, the criminal activity seems to be never-ending. Just this week, a man was sentenced for two counts of raping a child he had found on Craigslist. And last week, at least one other person was arrested for criminal activity on the site.
With a bad and worsening reputation, the imminent loss of the company’s largest shareholder, and growing critiques from the press, you’ve got to wonder, what will finally bring down Craigslist? Will it be eBay prevailing in court? Will law officials shut it down? Or will people simply quit using the crime-ridden site?