Gartner MQ under fire – Netscout alleges unfair practices in ‘pay to play’ lawsuit

SUMMARY – Netscout is suing research firm Gartner, accusing it of unfair practices in its construction of a Magic Quadrant, citing ‘pay for play.’
Gartner MQ framework

Gartner MQ framework

Netscout is miffed that Gartner’s positioning of the company as a ‘challenger’ in a recently published Gartner Magic Quadrant (MQ.) In court papers filed this week, it claims the Gartner MQ placement along with what it considers gross misrepresentations have harmed its ability to win business. These are serious accusations.

The court filing, which runs 58 pages makes for typical US lawsuit entertainment. Note – a copy of the lawsuit can be found at the end of this story.

Larded with hyperbole and chest thumping, it doesn’t hold back saying that:

Gartner’s acts and/or practices were immoral, unethical, oppressive and unscrupulous

The layman might interpret that as calling Gartner a bunch of shysters – that’s my word, not theirs. Here’s a few juicy highlights:

When with a previous employer, in one MQ interview I did it was suggested by the Gartner analyst that we were “not visionary enough” for that part of the quadrant. When I asked what was visionary I was told that to get that information we needed to be clients. So I concluded that you had to pay to know what was visionary and then re-work that into your vision in a nice circular process.

So I do not know what the cost is but it seems to me you need to be paying to play.

and…

I have had personal experience via a company I worked for that we were only included in an M[agic] Quadrant] when we became a Gartner customer, and when we stopped being a customer we weren’t invited to participate in the MQ again. So sorry, ex-Gartner folk, but it is a pay-for-play game.

You get the drift.

It gets interesting when we start to read some of the quotes Netscout uses in support of its suit. One of the more powerful statements used comes from Gartner’s founder, Gideon Gartner who is quoted as saying:

The reason why people revile the Magic Quadrant is because it is misused . . . As a guideline for a bunch of amateurs it’s one thing. But when all your clients live or die on the basis of whether Gartner Group puts you in the upper right hand corner in the — or wherever — that’s really bad news. And when there’s potential tainting of the objectivity of research because you have very large contracts with your vendors, with your customers, people will always come and complain. . . . Today, it is overused, misused and abused, terribly.

I am quoted as having written:

I get complaints pretty much every week of the ‘pay to play’ argument so whether you believe it or not is immaterial. It goes back to what @vinnie says about firm level issues and the corporate emphasis on aggressive selling or as one of your major clients puts it to me: tin cupping.

I would not repeat what I am told if it was one off or obvious sour grapes but I can say that some vendors I’ve spoken with see ‘pay to play’ (and not just Gartner but the analyst community as a whole) as an irritant to the point where I can immediately think of at least a handful that have voted with their wallets and said ‘no more’ after many years of engagement.

Those quotations come from a piece I wrote in 2009 when the ZL Technologies case came up. That case was lost because the judge pointed to Gartner’s defense that the MQ is not based upon fact but is an opinion.

The business model problem

I have long been a harsh critic of the analyst ‘game.’ I consider it to be largely corrupt and of limited value. In fact I go so far as to divide the world somewhat cynically between anal-ysts and analysts. I have also been a critic of the Gartner model and especially the MQ.

Let me be very clear. I know a number of Gartner analysts both past and present. I often take advice from these folk. This is not about those at the coal face who are trying to do a good job. This is about the business model and how aggressive sales corrodes the fabric of analysis.

Gartner’s business model plays all ways around. Vendors pay Gartner for a variety of services. Buying organizations pay Gartner for custom research, selection and negotiation services. The Gartner MQ has come in for fierce criticism in large part because of the pay to play aspect. But then vendors are not snow white in all this.

Vendors regard analyst services as part of their marketing, which in turn supports sales. The lawsuit makes this very clear. Buyers view the Gartner MQ as a validation point. Gartner plays on this, selling it to the the vendors on the basis that no-one buys technology without making a decision based upon a Gartner MQ.

It’s a subtle form of implied blackmail that discriminates against the smaller vendors. When a mega vendor cuts a $1 million check to Gartner, no-one notices. But when an early stage business find itself having to stump $50-100,000 then that’s an altogether different matter that gets sucked out of limited marketing resource.

In a recent conversation, one vendor told me that in briefings, Gartner analysts are instructed not to engage in conversation unless there is a consulting agreement in place. In another conversation, a vendor told me they couldn’t get briefings without there being a salesperson in the room or without a salesperson badgering them to do business in follow up sales calls.

Are buyers being duped?

Gartner has successfully defended itself in the past based upon the reasoning that the MQ is an opinion and not a statement of fact and cannot be relied upon as a statement of fact. That’s at the heart of the problem because it allows Gartner to take money from vendors for appearing in a Gartner MQ but without the constraints of having to prove any position as fact based. Does that mean the MQ is made up to suit the paying vendors? Netscout’s argument certainly implies that.

We cannot know and Gartner steadfastly refuses to provide transparency into how it arrives at MQ decisions. It does however insist that a myriad of factors go into those decisions, many of which are based upon gathered facts. It is the ‘based upon’ that leads to trouble because the buyer perspective is very different.

Buyers are well aware that the Gartner MQ is a set of opinions but they assume that it is fact led and not just fact based. More to the point, they believe that having been rigorously sense tested internally at Gartner, it is the equivalent of fact. The difference may seem subtle but is crucially important because of the power that Gartner wields in the marketplace. Netscout acknowledges that, claiming  customer is evaluating a Netscout copmeitor based upon the realtive positioning in Gartner MQ

Can Netscout win?

ZL Technologies lost their fight with Gartner in 2009 but this case looks to have a better chance of success. Netscout is arguing several things:

  • Repetition of gross factual inaccuracies
  • A failure to remedy inaccuracies
  • Claims of unfair practice based upon the ‘pay to play’ argument.
  • Unfair use of ‘undisclosed facts’ that Netscout cannot dispute because it doesn’t know what those are and Gartner refuses to reveal them

I’m no lawyer so will not speculate on specifics except one. After a back and forth with Gartner, Netscout asked for their name to be withdrawn from the report. Gartner refused on the grounds it would lose credibility since Netscout is so important a player in their market. There’s irony right there.

However, there are plenty of uncertainties and ‘known unknowns’ cited in the suit that will need a lot more detail and pencil sharpening before this case gets to trial – if it ever does.

Verdict

  • Regardless of how you view technology market theatrics, there is plenty at stake. It will be interesting to see how well Netscout’s lawyers prove to be in dissecting Gartner’s business model and the extent to which they can garner support in court for their ‘pay to play’ assertions.
  • Many of the complaints I hear are behind closed doors. This lawsuit gives opportunity for Netscout to pull in vendors who have felt the same pain.
  • Gartner could easily argue it has nothing to gain by making false statements because it is running a reputation based business. That’s true.  But then I’ve seen plenty of vendors claim purity of thought only to slip up once the sales people start yapping.
  • Any abuse of position in the market should be punished. The analyst community along with those who call themselves analysts but are no such thing by any reasonable definition, should take note of what happens next. They’ve all had a free pass for too long.

Image credits: Gartner Group

Den Howlett

@dahowlett

Disruptor, enterprise applications drama critic, BS cleaner, buyer champion and foodie trying to suck less every day.
Den Howlett
Den Howlett

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  • dahowlett says:

    DanielHonigman Krisgo – interesting idea – what’s the business model?

  • dahowlett says:

    greg_not_so ZL went to verdict. If this one does not and is settled then GG will leave many questions unanswered. From that POV they’d lose because any settlement in this kind of case represents a tacit admission regardless of the legal position.

  • greg_not_so says:

    interesting how the state of steady habits will view “unfair trade practices” and corporate defamation, but unfortunately we will probably never find out as it will be settled by the parties before reaching a verdict. for once, i would enjoy being called to a jury duty even thought ‘voir dire’ would make me ineligible.
    in any case, thanks for the link to the actual court filing.

  • dahowlett says:

    Krisgo There have been and are many attempts at doing this. The problem is that very few actually add significant value and so it is almost impossible to fund. If there is a model that can work then sure, I’d go for it but so far that has proven elusive. Having said that, I do have some ideas around this.

  • Krisgo says:

    There is only way to address Gartner’s stranglehold on IT purchasing behavior. A “Consumer Reports” style approach where the organization that is evaluating technology does not engage in any monetary relationship with vendors of technology. The buyers of technology can buy analysis directly from the “Consumer Reports” like organization. It can be done. There are enough categories of technology and sufficient dollar volume and customers to support such an organization. The evaluation would require cooperation/collaboration of buyers of technology so that feedback and analysis of real-life use cases of the technology can be done properly. May be you can start such an organization.