Craigslist and eBay need to focus on the market, not the courts

Implications: 1.  Lawsuits are a reflection that the market competition is very intense. 2.  Craigslist needs to focus on product solutions

Analysis:

The current deal with eBay and Craigslist is just as bad as the deal that Apple Computer made with the Beatles record Label (Apple Records) where Apple Computer stated they would never get into the music business.  Of course, with the I-POD and I-Tunes, clearly Apple IS the music business.  In hindsight, we should have learned that predicting the future of your business is a dangerous situation.  And it seems that eBay did not learn from the early error of Apple.

It is clear that eBay and Craigslist are more competitors than they are investors or partners.  From my understanding of how this has evolved, I believe that eBay initially wanted to purchase Craigslist, but has now found themselves as competitors for the same market.  The challenges with this deal are that there is no clear public understanding of this relationship. 

The good news is that the business of online classifieds is growing.  Most people I know look online for things more often than they would look into a newspaper for an ad.  In fact, the main loser in this arena are the newspapers.  Most people do not want to advertise in a newspaper anymore.  They want to advertise online.  The bad news is there is enough money to fight over and it looks as if that is what is happening.

Is eBay an investor in Craigslist and for what reason?  Since eBay is a competitor with Craigslist why are they investing money in Craigslist?  There is too much confusion about what each companies perspective and purpose is with each other.  Given the confusion around the relationship, it is not surprising that eventually a lawsuit resulted.

I think it is instructive to look at the relationship between Apple and Microsoft.  Microsoft invested significantly in Apple when Steve Jobs returned to run Apple.  As a result, Microsoft office is installed on many Macintoshes.  The deal was struck to help both companies.  It was also clear what was wanted by both companies at the time.  As a result, this relationship is an example of how two competitors can also partner.

The message should be clear for investors and IT professionals.  If you can not understand why a deal is being put together in simple terms, then you need to think twice about investing in the solution you might be implementing or investing in the company if you are an investor.  My experience with Lawsuits is that there may be a winner and a loser, but mostly both sides lose.  This is particularly true when the initial partnership was meant to be positive for both.  If the terms of the deal change, then the arrangement should change.

In this case, if I were eBay, I would either do a hostile takeover of Craigslist or sell the investment in Craigslist and use the money to win the business in the marketplace.  At least then the message would be clear.

If I were Craigslist, I would review my conflict of interest rules for board members.  As a board member on two nonprofits, I am required to sign a conflict of interest clause.  My concern for Craigslist is that this lawsuit will become a distraction for them and will result in poor performance of their core business.

This is nothing more than two competitors going after each other in the courts.  It is a distraction from the real battle happening in the marketplace.  To understand who will win, ignore the impact of the lawsuit and watch the success of the businesses.