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Craigslist talked back to eBay's claims of stake dilution, saying the online auctioneer's actions were unethical.
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The online auction giant, eBay sued craigslist on Tuesday on allegations of unfairly trying to dilute eBay's stake in it.
In 2004, eBay bought a 28 percent stake in privately held Craigslist.
eBay alleged then in January of this year, Craigslist's board - consisting of founder Craig Newmark and Chief Executive Jim Buckmaster - unilaterally acted to dilute eBay's economic interest in Craigslist by more than 10 percent.
"Coming from a company that views Craigslist as a prime competitor, filing a suit without so much as mentioning these assertions to us beforehand seems unethical and suggests ulterior motive," said Craigslist in a statement posted on its blog on Tuesday.
eBay got into Craigslist in 2004 after one of the former Craigslist shareholder closed a deal with eBay to take his stake in the firm.
Craigslist's founder, Newmark said the time when eBay joined Craigslist, both companies had the same philosophies but eBay in a statement said at the time of the deal, it was more interested in learning about classifieds business.
The San Jose-based online auctioneer had $7.7 billion revenue in 2007 and currently has 279 million registered users, ranking 17th as the most popular English-language site compared to Craigslist in 45th position.
Based in San Francisco's Inner Sunset neighborhood, Craigslist has 25 employees and its page views have grown from 1 billion per month in 2004 to 9 billion per month now.
Craigslist said it has 30 million new classifieds per month posted for free.
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