Craig Newmark testified on Thursday that he regretted getting into bed with auction site eBay (EBAY) almost as soon as his head hit the pillow. The founder of Craigslist, the online classified site that has decimated large chunks of the newspaper industry, sold 28% of his company to eBay in August 2004. Within months, he recounted, eBay began to pull back on its promises, causing him to regret the decision.

During the negotiations more than five years ago, Meg Whitman, who was the CEO at the time, told Newmark that eBay would be happy to sit back as a minority shareholder for several years and use Craigslist as its exclusive venue for classified ads. Yet, shortly after the deal closed, eBay pushed for a bigger piece of the company and acquired an online classified company outside the United States. Both Whitman and company founder Pierre Omidyar testified that eBay was clear about its intentions.

The lawsuit, filed by eBay against Craigslist, involves the size of the former's minority stake in the privately held, relatively low-tech and highly popular classified site. eBay claims that Newmark diluted its share to 24% through a "self-dealing" scheme to issue more equity.

Craigslist is certainly a funky company. In light of its huge traffic numbers, it could easily post huge profits. Or, it could sell out for a big payday or even go public. Yet, such things seem to be anathema to the company – at least to its founder, Craig Newmark.

And now there's a big issue with eBay (NASDAQ: EBAY), which owns 28.4% of Craiglist. Apparently, the relationship has been somewhat rocky as is evident by the lawsuit announced last night. eBay is claiming that the board of Craigslist (which consists only of Newmark and the CEO, Jim Buckmaster) has attempted to water down the ownership position – to a mere 10%.

I can certainly understand Craigslist's actions. After all, eBay has its own classifieds service called Kijiji. But hey, in the tech world, such arrangements are nothing new. It's to be expected (and so are lawsuits).

Interestingly enough, Newmark is not being shy about things and has responded via his blog. According to him, the lawsuit is a surprise and he claims that eBay has "ulterior motives," which may involve a hostile takeover.

Really? Let's see, how many times has eBay launched a hostile deal? I can't remember. Plus, such a thing is nearly impossible for a minority shareholder to pull off (and, even more difficult if the ownership position has been heavily diluted).

Unfortunately, eBay's legal complaint was not disclosed (because of confidentiality reasons), but the venue is Delaware, which has lots of expertise in shareholder disputes and usually handles things fairly quickly.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

The Net Neutrality debate is taking on a fever pitch as Congress considers legislation that would, in essence, allow AT&T, Comcast and other phone and cable operators to charge for "premium" service, including data-heavy VoIP and video. Google, Amazon and other providers of data want to keep the content delivery the same for all -- and prevent operators from charging for preferred placement.

At its heart, the legislation would allow content machines to bid for priority delivery. In Craig Newmark's words, "[should] Yahoo ... be allowed to outbid Google to slow down Google on people's computers?" The group he supports, "Save the Internet," says no. Mike McCurry, former White House spokesman and co-chair of the very confusingly-named "Hands Off the Internet" group, say yes. He echoes Chicken Little as he tells Newmark in a Wall Street Journal debate, "the current Internet is creaky and will suffer congestion if we don't invest in improvements. The network operators prepared to make those investments need to get a return and one way is to charge a premium for managing huge bandwidth content differently."

It's a very confusing argument, as they seem to be both arguing for less government involvement and at one point Newmark commends McCurry for "cleverly using Colbertian 'truthiness.' "