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Lawsuit seeks damages after new Magic Quadrant report labels NetScout as 'challenger' in its market segment.

NetScout Sues 'Pay-to-Play' Gartner

Carol Wilson
8/6/2014
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Service assurance vendor NetScout is taking on Gartner, suing the consulting and research giant for unfair trade practices and claiming Gartner's well-known "Magic Quadrant" ratings are heavily skewed in favor of the clients that pay it big consulting bucks.

"Gartner, an information technology ('IT') research giant, markets itself as an 'independent and objective' company offering actionable technology research from an 'unbiased source.' In fact, Gartner is not independent, objective or unbiased, and its business model is extortionate by its very nature," the NetScout Systems Inc. (Nasdaq: NTCT) lawsuit states.

The full text of the lawsuit can be found here.

Gartner Inc. , as you'd expect, denies NetScout's claims. "We are aware of a complaint filed by NetScout Systems, Inc in a Connecticut court that stems from its unhappiness with NetScout's placement in a Gartner Magic Quadrant," states Andrew Spender, GVP of Corporate Communications at Gartner, in an email sent to Light Reading. "While it's not our practice to discuss pending litigation, we do consider this complaint to be without merit and intend to defend ourselves and the integrity of our research processes vigorously. We remain committed to providing our clients with independent research and advice about the products and services that we cover and upon which they have relied for decades."


Learn more about how test and measurement systems are evolving in our test and measurement section, part of our SPIT coverage.


NetScout is seeking monetary damages, but also a permanent injunction against Gartner's "unfair and deceptive trade practices, including... any republication of false and defamatory statements about NetScout."

Specifically, the NetScout complaint says Gartner's March 2014 report on the Network Performance Monitoring and Diagnostics market contained a series of derogatory and untrue comments about NetScout, which the vendor tried unsuccessfully to correct after seeing a draft version. When Gartner refused to make the changes, NetScout attempted to withdraw from the process but was told that was impossible as it would damage the report's credibility, the lawsuit says.

Instead, the complaint alleges, "Gartner ranked three other companies as 'Leaders' who spent a significant amount on Gartner's services and who do not deserve to be ranked ahead of NetScout, by any measure."

Those three companies -- Riverbed, JDSU-Network Instruments and Fluke Networks -- all spent "a substantial amount of money" on Gartner consulting services, NetScout alleges.

According to the complaint, a Gartner analyst -- who is not identified by name -- told NetScout's president and CEO, Anil Singhal, "NetScout is not going anywhere because it does not spend enough on marketing." The conclusion that Singhal drew from this was that NetScout needed to spend more with Gartner.

NetScout is asking that the same kind of action that the US Securities and Exchange Commission (SEC) brought against financial analysts who were running pay-to-play schemes be brought against Gartner, for damaging NetScout's business, even though it acknowledges the SEC doesn't regulate Gartner. The lawsuit is instead brought under the State of Connecticut's Unfair Trade Practices Act.

Gartner has been sued before for Magic Quadrant ratings, but that lawsuit, by a software firm, was dismissed by a California Circuit Court judge.

— Carol Wilson, Editor-at-Large, Light Reading

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Steve Saunders
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Steve Saunders,
User Rank: Light Sabre
8/8/2014 | 3:43:07 PM
Re: Not all downside
7, 

Understood - helpful insight! 

-SS 

 
brooks7
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brooks7,
User Rank: Light Sabre
8/8/2014 | 3:41:16 PM
Re: Not all downside
Steve,

I spent over 20 years in the Enterprise and stand by my statement.  Nobody selects products because of placement in a Magic Quadrant.  About the only leg up that it provides is that a CIO might ask the IT guys to take a look at a company.

Tech evaluators are rather scornful of marketing and look at Gartner MQ as Marketing and not a technical evaluation against needs.  The one time that they might use it is if they are starting an evaluation of something brand new that they have no experience with.  However, they are MUCH more likely to talk about this with their friends.

Not saying that MQs are wrong are bad.  They even have their place as a marketing tool.  But people are going to do their own decision making.  If you are a small or relatively unknown supplier in a new market then this can make or break you.  If you are in an established market then I think it has a much lower value.

 

seven
Steve Saunders
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Steve Saunders,
User Rank: Light Sabre
8/8/2014 | 2:17:18 PM
Re: Not all downside
Seven - interesting. But isn't it also supposed to be more influential in IT than telecom? 

I think we should start referring to it as the "Quid Pro Quadrant" 

:) 

 

 
brooks7
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brooks7,
User Rank: Light Sabre
8/8/2014 | 1:57:44 PM
Re: Not all downside
You know I have never met anyone who made a product purchasing decision because of a Gartner Magic Quadrant.

I have seen M&A and Stock Buying decisions because of it.

seven
Steve Saunders
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Steve Saunders,
User Rank: Light Sabre
8/8/2014 | 1:28:46 PM
Re: Not all downside
I agree - hard to see where the settllement is an easy option for Gartner. Now the suit is in the public domain everyone will asume, should it settle out of court, that it paid Netscout off (major loss of reputation, there). 

On the other hand, should it stick to its guns, Netscout gets to go the email discovery route and then one has to ask what is the likelihood that there is an email chain somehere in the last few years between sales or sales and an analyst at Gatrner that refers to or even just looks like a reference to a quid pro quo? 

That would make Netscout's case right there, at which point Gartner loses both rep and a huge bucket of money. 

It's all good stuff. I'm enjoying it. And kudos to Netscout for nutting up and saying what most everyone else has been talking about behind closed doors for years. 

Happt Friday all! 

 

 

 

 
mendyk
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mendyk,
User Rank: Light Sabre
8/7/2014 | 4:24:59 PM
Re: Not all downside
It's hard to imagine what kind of settlement could be reached here. If Gartner did materially damage NetScout's revenue potential, that could be a pretty big number.
kq4ym
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kq4ym,
User Rank: Light Sabre
8/7/2014 | 4:20:51 PM
Re: Not all downside
The greed factor easily enters the equation when money numbers grow large, and sales commissions depend on getting the sale made. It's always interesting how such law suits begin, one side claims unfair trade practices and the other side denies everything alleged. In the end there's usually some sort of settlement, with the lawyers making out best of all.
mendyk
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mendyk,
User Rank: Light Sabre
8/7/2014 | 2:59:32 PM
Re: A Gartner tale
Gartner can point to this type of apocryphal story and say, "See -- we don't reward clients simply for paying us a lot of money for our service." The idea that the startup CEO expected some pro quo for his quid and didn't get it makes Gartner's case quite nicely. So if this case actually goes to trial, and if it devolves to a parade of "character" witnesses, Gartner will have an advantage. One question though -- Is a Chinese wall different from, say, a Texan wall or a Norwegian wall?
Liz Greenberg
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Liz Greenberg,
User Rank: Light Sabre
8/7/2014 | 2:47:23 PM
Re: Not all downside
I agree Mendy...using qualitative numbers only reinforces the concept of the number matching the question. I was taught early on in my Proctor and Gamble days to be very careful how to ask even qualitative questions as to not skew the responses.  It holds true always.  Look at how kids ask their parents questions for great examples.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
8/7/2014 | 2:43:37 PM
A Gartner tale
A startup CEO I know hated Gartner -- said they kept demanding high fees from him and they did NOT rank him high in their Magic Quadrant. 

When he complained to the Gartner salesguy, the salesguy started in to explain that the Magic Quadrant is independent and not pay-for-play, blah blah blah

The CEO responded he understands all that (and he does -- he understands the journalism process very well, and the idea of chinese walls and separation of church and state). But his point is that the Gartner analyst tells him what to do, he goes out and does exactly what the analyst says, and then comes back and Gartner STILL gives the company poor ranks. So why (the CEO said) should I spend my meager startup budget to pay large amounts of money to Gartner when Gartner itself apparently doesn't believe its own advice. 
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