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Vendor Sues Gartner Over Magic Quadrant 'Pay to Play' Model

customer experience, Vendor Lawsuit: Gartner's Magic Quadrant Is 'Pay to Play' ModelA computer performance management provider seeks monetary damages in a lawsuit filed this week against Gartner Inc. after the IT research giant named the vendor a "challenger" and not a "leader" in one of its Magic Quadrant industry reports.

NetScout Systems, based in Westford, Mass., filed the lawsuit in Connecticut Superior Court Tuesday under the Connecticut Unfair Trade Practices Act for "corporate defamation arising out of Gartner’s information technology research business practices."

"Gartner is not independent, objective or unbiased," NetScout claimed in its lawsuit, "and its business model is extortionate by its very nature. Its substantial success is due to the worst kept secret in the IT industry: Gartner has a 'pay-to-play' business model that by its design rewards Gartner clients who spend substantial sums on its various services by ranking them favorably in its influential Magic Quadrant research reports and punishes technology companies that choose not to spend substantial sums on Gartner services." 

NetScout reported in its lawsuit it has not paid Gartner for consulting services in the past five years.

Tale of the Tape

In a statement to CMSWire, Andrew Spender, group vice president, Corporate Communications at Gartner, acknowledged the company is "aware of a complaint filed by NetScout" in a Connecticut court "that stems from its unhappiness with NetScout’s placement in a Gartner Magic Quadrant."

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," he continued.

NetScout did not immediately return requests for comment. In particular, CMSWire wanted to know if NetScout would have filed a lawsuit had Gartner named it a "leader" in the Magic Quadrant. 

NetScout, in business since 1984, reported that since 2011 annual revenue has grown from $260 million to nearly $400 million. NetScout offers sales, support and services in more than 30 countries, yielding international revenues for fiscal year 2014 of approximately $93 million. NetScout employs more than 1,000.

Founded in 1979, Gartner employs approximately 6,000 associates, including almost 1,500 research analysts and consultants. It has clients in 85 countries. Gartner's revenue for 2013 exceeded $1.7 billion. 

It routinely distributes industry reports it calls "Magic Quadrants" where it ranks vendors in particular spaces, offering criticism, praise and state-of-the-industry analysis and predictions. It groups vendors into four categories: "Leaders, Visionaries, Niche Players and Challengers." 

NPMD Magic Quadrant Questioned

NetScout officials in the lawsuit cited one Magic Quadrant in particular — the Network Performance Monitoring and Diagnostics market ("Magic Quadrant Report for NPMD"), published on March 6. Gartner ranked NetScout as a "Challenger," which "Gartner defined as, essentially, a technology company that saddles its customers with outdated technology," according to the lawsuit.

Gartner was wrong, NetScout officials said in the lawsuit, in stating that NetScout is "currently struggling to deal with new technical demands and rising expectations" and has "architectures, feature sets and pricing structures that require modernization (often in progress) to better compete with those in the Leaders quadrant." 

NetScout cited other false allegations in the Magic Quadrant and claimed it notified Gartner after it received a draft report. The "leaders" in the report do not deserve to be there over NetScout, according to the lawsuit.

"NetScout has suffered significant damages and ascertainable loss as a consequence of Gartner's deceptive, immoral, unethical, oppressive and unscrupulous acts or practices," according to the lawsuit. "Gartner committed unfair and deceptive acts with improper intent, knowledge, and willfulness, requiring punitive damages."

Gartner Response

Gartner provided  some insight into its Magic Quadrant model earlier this year. In an article published the same day of the Magic Quadrant centered in the lawsuit (March 6), CMSWire asked Gartner about its review methods.

Gartner spokesperson Andrew Spender told CMSWire he can’t talk about the value proposition of other organizations — and said Gartner is the “IT professional's best first source for addressing virtually any IT issue.”

Gartner employs, Spender added, more than 900 analysts in 26 countries who cover 1,200 topics across the IT landscape. Gartner analysts have an average of 12 years of experience in their respective field, he said.

“Our rigorous research process and research methodologies, including the Gartner Magic Quadrant, provide the foundation for unbiased, independent and actionable advice,” Spender said. “Gartner insights are drawn from a fact base of interactions with clients in more than 12,400 distinct organizations worldwide, 320,000 one-on-one client discussions and more than 12,000 vendor briefings each year.”


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