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NetScout Systems vs. Gartner Inc.

NetScout Systems vs. Gartner Inc.

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Published by skirsner
Lawsuit filed on August 5th in Connecticut Superior Court.
Lawsuit filed on August 5th in Connecticut Superior Court.

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Published by: skirsner on Aug 06, 2014
Copyright:Traditional Copyright: All rights reserved

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08/18/2014

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RETURN DATE: AUGUST 19, 2014
NETSCOUT SYSTEMS, INC.,
UPERIOR COURT
Plaintiff,
UDICIAL DISTRICT OF
v.
TAMFORD/NORWALK GARTNER, INC., T STAMFORD
Defendant.
UGUST 4, 2014
COMPLAINT
Plaintiff NetScout Systems, Inc. ( NetScout ), by its attorneys Bingham McCutchen LLP,
and in support of its claims against Defendant Gartner, Inc. ( Gartner ), respectfully makes the
following allegations. Except as to allegations regarding NetScout, which allegations NetScout knows to be true, these allegations are made upon information and belief, based on publicly
available information and the diligent investigation conducted by NetScout.
NATURE OF THE ACTION
1.
This is an action for violation of the Connecticut Unfair Trade Practices Act
( CUTPA ), Conn. Gen. Stat. § 42-110b, and corporate defamation, brought by NetScout, a
Massachusetts information technology company, against Gartner.
2. 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
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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 ( Magic Quadrant reports ) and punishes technology companies that choose not to spend substantial sums on Gartner services.
3.
While Gartner purports to provide objective and unbiased analysis of technology
companies
in its Magic Quadrant reports, Gartner sells other services to technology companies,
including consulting services, informing companies that, if they pay for Gartner's consulting
services, the companies will enhance their relationships with Gartner analysts, an obvious means
of improving their prospects in the Magic Quadrant report. Gartner's message is plain: pay
Gartner for consulting services and in exchange Gartner will rank your company higher and
make favorable statements about your company in its Magic Quadrant report.
4. This pay-to-play business model is facilitated by Gartner's immense influence
within the IT industry. A favorable ranking in Gartner's Magic Quadrant report can "make or break" an IT company. IT companies are pressured into spending substantial sums on Gartner's "consulting" services to better position themselves in these "magic" reports. As one published article questioning Gartner's business practices observed: "[flailure to get a favorable mention
in an analyst report could undermine years of product development. Acceptance, on the other hand, boosts a company's exposure and is essential for buyers drawing up short lists.
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5.
Gartner was founded in 1979 by prominent Wall Street computer analyst Gideon
Gartner. Gideon Gartner has stated that Gartner's Magic Quadrant reports are misused and abused and commented on the potential tainting of the objectivity of [its] research. As
Gideon Gartner, who is no longer affiliated with Gartner, stated:
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.
6. The very same analysts who draft Gartner's influential Magic Quadrant reports
sell "consulting" services to the IT vendors ranked in Gartner's reports. Through its
consulting services, Gartner sells access to its analysts. Thus, not only is Gartner issuing
purportedly unbiased research about its own fee-paying clients, but the very same analysts who draft those reports have direct consulting relationships with the companies that they purport to
independently and objectively analyze. These conflicts of interest inevitably lead to biased research reports, aggressive cross-selling of Gartner's research-based consulting services, and
less desirable Magic Quadrant rankings for those technology companies who refuse to spend substantial sums on those services.
7. The U.S. Securities and Exchange Commission ( SEC ) has punished similar
business practices by financial analysts on Wall Street (as opposed to technology analysts like Gartner), finding that such business practices violate rules requiring the financial analysts to
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