The online auction giant, eBay, has a 28.4% share in the not-for-profit competitor Craigslist ever since 2004. According to eBay, the founder of Craiglist is attempting to dilute eBay's stake in the company through certain transactions performed in January, which have not been yet disclosed to the public. eBay alleges these transactions have diluted its stake by more than 10%.

Craigslist responded in a blog post titled "Tainted Love" that eBay's allegations are false and unfounded, and came as a surprise to them because no attempt to engage in a dialog with the company has been made. Craigslist also said it was "suprised and dissapointed" of eBay's decision to open the lawsuit.

eBay, before known as a rather silent partner in the Craigslist deal said that over the past years they "acted openly and in good faith as a minority shareholder" and they are "surprised by these recent unilateral actions."

Craigslist was founded in 1995 by Craig Newmark of San Francisco. It quickly became the most popular free listings site, with more than 9 billion page views per month. It employes 25 people and charges exclusively for job listings in 10 American cities and selected real estate listings in New York.