Buyers and sellers on eBay are due to get a bigger cushion for transactions gone bad.
At its eBay Live community conference this week, the online auction giant offered details on more generous PayPal protections and incentives for its top sellers, and also feted the anniversary of its Kijiji classified ad service.
Starting in the fall, the company says it will cover 100 percent of an item's purchase price on most transactions for buyers who use eBay's PayPal service, with no cap on coverage. The policy addresses items that are not received by buyers and those that are significantly different from their listing descriptions.
For sellers in PayPal transactions, eBay in the fall plans to boost protection against claims, charge-backs, and reversals connected to an unauthorized payment or failure of an item to arrive at its destination in 190 markets worldwide. The coverage, eBay says, will come at no additional cost to the seller and with no dollar limit.
The current ceiling for buyers' and sellers' coverage generally has been just a few hundred dollars, and sellers had been protected on shipments to only a handful of countries.
Starting this summer, meanwhile, top-rated PowerSellers will qualify for additional discounts based on their customer experience ratings. They could see 20 percent lopped off the commission that eBay charges sellers for sold items and a 23 percent reduction in daily rates for UPS ground shipping.
That move is likely to stir further resentment among smaller sellers already up in arms over existing discounts to top performers.
In addition, eBay noted the first anniversary of Kijiji's debut. While it's clearly pleased to have 4 million unique users per month for the classified ad site, it's also embroiled in a lawsuit filed by Kijiji rival Craigslist that accuses eBay of unfair competition, among other charges.
How would you like having one of your main competitors sitting on your board?
That's the position Craigslist found itself in after eBay bought a 28 percent share of the online classified publication in August 2004. The relationship was cordial until last July 3, when eBay launched a U.S.-version of Kijiji, its own classified Web site and Craigslist competitor.
I thought back to that day when I heard eBay had filed a lawsuit this week against Craigslist founder Craig Newmark and CEO Jim Buckmaster. The online auction service alleged that the men tried to strip eBay of its rights as a Craigslist minority shareholder and attempted to dilute its ownership stake.
When Kijiji launched in the U.S., I asked Newmark and Buckmaster: "Isn't it weird revealing your company's secrets to a huge rival, one who just happens to sit on your board?"
Both men downplayed the problems, but Buckmaster wrote what now appears to be a poignant e-mail: "I'm not a legal expert but I think it's safe to assume (eBay) will continue to conduct themselves appropriately with respect to their responsibilities to Craigslist."
Less than two weeks later, Buckmaster changed his tune and would ask eBay to sell its Craigslist shares. The question now is what made him change his mind so quickly.
To his credit, Greg Sterling, of consultancy Sterling Market Intelligence, whom I interviewed for the July 3 story, predicted there would be trouble. Speaking then about eBay's position as a Craigslist board member as well as a competitor Sterling said: "There is definitely a conflict of interest."
Anybody who has ever heard Newmark speak knows how much the online classifieds publication means to him. He has never given any indication that he is interested in cashing out. According to the lawsuit, Newmark once said: "Death is my exit strategy."
But Newmark's desire to keep control of Craigslist led him and Buckmaster to violate eBay's rights, the auctioneer alleges.
After reading the 29-page complaint, the positions of both sides comes through clear. Newmark and Buckmaster are uncomfortable with one of their main competitors sitting on their board, and eBay makes no secret of its desire to gain control of Craigslist.
Their positions were revealed in correspondence last year between Buckmaster and former eBay CEO Meg Whitman.
Last July, just a week after eBay launched a U.S. version of Kijiji, Buckmaster wrote to Whitman: "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."
Whitman wouldn't hear of it.
"We are so happy with our relationship with the company," Whitman wrote back, "that we could neither imagine...parting with our shareholding in the company under any foreseeable circumstances. Quite to the contrary, we would welcome the opportunity to acquire the remainder of the company we do not already own."
A judge will decide whether Buckmaster and Newmark violated eBay's rights when it made moves that eBay alleges were aimed at limiting its ability to sell its Craigslist stake, diluted its shares to less than 25 percent and prevented eBay from appointing board members.
The auctioneer also accuses Buckmaster and Newmark of violating their fiduciary duty.
The mystery over what prompted eBay to sue Craigslist last week appears to be solved.
Apparently eBay feels that its ownership stake in Craigslist was unfairly reduced following eBay's launch of rival online classifieds service Kijiji, which went live overseas in 2005 and in the U.S. in 2007, according to the 26-page lawsuit filed in Delaware's Court of Chancery and made available by eBay on Wednesday.
According to the heavily redacted, public copy of the complaint, which names Craigslist founder Craig Newmark and CEO Jim Buckmaster, Craigslist views Kijiji as a competitive activity that cancels some shareholder rights that eBay acquired in 2004 when it bought a stake in Craigslist.
In response to that, Craigslist reorganized its stock structure in January, reducing eBay's stake in the online classified site from 28.04 percent to 24.85 percent. The reduction mean that eBay loses the ability to elect a director.
However, eBay feels Craigslist overstepped its rights and has filed suit over the diluting of its stake.
"The original agreement between the two parties always envisioned that there could be competitive activity," eBay spokeswoman Kim Rubey told the Associated Press.
The lawsuit also discloses that Meg Whitman, who was CEO of eBay at the time, offered to buy the remainder of Craigslist in a letter to Craigslist in July 2007. Whitman's letter was in response to a letter Buckmaster sent that expressed "'negative' feelings toward eBay's launch of Kijiji," and that stated "we are no longer comfortable having eBay as a shareholder."
Whitman responded by saying that eBay had taken steps to "firewall off" its Kijiji operations from the corporate management of its equity stake in Craigslist, according to the suit.
She went on to say that eBay was "so happy" with its relationship with Craigslist that "we would welcome the opportunity to acquire the remainder of (the company) we do not already own whenever you and (Newmark) feel it would be appropriate," according to the lawsuit.
Craigslist plans to make a formal response to the complaint in the next few weeks, the company said on its blog.
"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," Craigslist's blog said.
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