Ebay shots itself in the foot by suing Craiglist over Kijiji

Ebay made public why it chose to sue Craiglist in a Delaware court last week; in a strange move, the auction company decided to become aggressive towards a company in which Ebay has a substantial share.

Back in August 2004, Ebay bought more than 28 percent of Craiglist and part of the deal was that if Ebay became a competitor to Craiglist, both sides would not have a right of first refusal to acquire each other's shares.

Then the following year, Ebay acquired Kijiji.com, which owns popular classified ads website Gumtree while pursuing interests in Craiglist and allegedly attempted to take over the company at several occasions.

But the non profit firm reorganised its stock structure diluting Ebay's stock causing it to fall under 25 percent which meant that Ebay lost its only seat on Craiglist.

This erupted into the lawsuit and the complaint can be viewed here (PDF document).

Ebay has purchased several companies in the past that were not even close to its core business - online auctions.

Companies like Skype and Stumbledupon cost the company billions and have yet to bring in substantial revenues.

Only Kijiji and Paypal have proved to be successful and as the classified business is still worth several billions worldwide, Ebay could well be looking for a quick kill or to quash Craiglist altogether.