According to the Washington Post, DOJ investigating alleged criminal activity by eBay employees in relation to Craigslist, the Department of Justice is investigating whether eBay employees misappropriated confidential information from Craigslist to build its own classifieds website.  

Apparently Craigslist has been claiming for years that eBay (which bought a stake in the company in 2004) used its relationship with Craigslist to obtain confidential Craigslist information, and that eBay used that information to its own competitive advantage. 

In 2005, eBay founder and Chairman, Pierre Omidyar, allegedly asked Craigslist for information about “how Craigslist went about adding new cities and for advance notice of its launch plans.”  The DOJ also alleges that eBay “engaged in false advertising and trademark and trade-name infringement in order to exploit Craigslist’s trade rights.” 

In 2008, Craigslist decided that “eBay had moved from being a partner to a threat.”  Craigslist’s CEO alleged that “after starting its own classified site in theU.S., eBay began buying online ads steering Internet users looking for Craigslist to its own sites.”  

EBay, for its part, claims that Craigslist’s allegations “are without merit.”  Not surprisingly, in addition to the DOJ investigation, both companies are currently involved in civil litigation against one another.  

Companies accused of misappropriating confidential information don’t often end up facing criminal investigation, but with Internet giants like eBay and Craigslist, the stakes are high.  We will keep you posted on any developments.