eBay Takes On Craigslist

And while the rise of more casual sites like Cragslist is already taking its toll on newspaper companies, competition from hard-charging giants like eBay could take the carnage to another level.

Given its wealth of experience in the auction space and a prime perch from which to observe Craigslist over the last three years, eBay may also be uniquely positioned among Internet companies to take advantage of the local commerce opportunity.

Other major Internet companies have often stumbled when it comes to eBay's turf. Yahoo!(YHOO Quote), for example, shuttered a rival auction site in May, though the company continues to run an online classified business. Google(GOOG Quote) recently repositioned its product search, formerly called Google Base, but has yet to become a significant force in the market.

For now, eBay's Kijiji service is free. But the company could charge selective fees once it gains enough market share. Tapping into more display advertising spending -- which is set to explode this year -- could grow into another important source of revenue.

The auction giant's latest move, in other words, should hearten its investors. But for companies that partner with or sell stakes to eBay, it's another story.

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