Why Are the Feds Getting Protective of Craigslist?

Federal prosecutors just jumped into a long running slapfight between eBay and Craigslist over how the former acquired a stake in the latter. As it turns out, they're on Craigslist's side: They've opened a criminal probe into whether eBay executives used their ownership to illicitly obtain competitive information.

After eBay acquired a stake in Craigslist, eBay's founder used his position as a Craigslist board member to "request information about Craigslist's approach to adding new cities as well as advance notice of plans to launch in new cities," according to the feds' subpoena. eBay subsequently launched its own classified advertising business, competing with Craigslist and allegedly leveraging its inside knowledge. Federal prosecutors, according to Reuters, took much of their subpeona "word for word [from] another civil lawsuit filed by Craigslist against eBay. That litigation in a San Francisco court is ongoing."

Craigslist hasn't had much luck against eBay; a 2008 civil suit ended last year with a reversal of the classified site's "poison pill" to dilute eBay's ownership. Thankfully, Craigslist has long "cooperated actively" with law enforcement to snitch on the prostitues, johns and pimps who use its listings. A history of being helpful to the law certainly doesn't hurt when you need the law to be helpful to you.

[Pic: Craigslist founder Craig Newmark at Google DC, via Shashi Bellamkonda/Flickr]