01:07 AM

Gartner's "Magic Quadrant" Goes To Court - ZL Technologies Lawsuit

Gartner will seek to dismiss claims by ZL Technologies, based in San Jose, CA, that the use of it's proprietary "Magic Quadrant" is misleading and favors large vendors.

On Friday October 23, Gartner is seeking the dismissal of ZL's complaint on First Amendment grounds.

Dennis Howlett, over at ZDNet writes:

ZL points up some uncomfortable assertions. Even if it lucks out in court it will have been successful in drawing attention to important issues.

...I spend a lot of time talking to other so-called analysts. Almost to a man/woman (but not entirely) they are 70-80% in the pay of the vendor community. Many believe they are independent. However when I ask who really pays the bills they go silent. Shout all you like about defending your independence but at the end of the day? Show me the money.

Gartner in the dock over Magic Quadrant | Irregular Enterprise | ZDNet.com

Gartner's Magic Quadrant has been very successful for the market research and analyst firm. It has been widely adopted as a way to define the position of companies and their products, within their sectors.

Companies that appear in the top right hand quadrant are considered the best positioned, the higher the position the better.

ZL Technologies provides email and file archiving for corporations. It's claims are:

- Gartner's use of their proprietary "Magic Quadrant" is misleading and favors large vendors with large sales and marketing budgets over smaller innovators such as ZL that have developed higher performing products.

- The complaint alleges: defamation; trade libel; false advertising; unfair competition; and negligent interference with prospective economic advantage.

- Fair Disclosure on Conflicts of Interest - Gartner generates its revenues from payments made by the same vendors whose products it evaluates. Similar to the new rules now being imposed on financial ratings agencies on Wall Street, Gartner should be required to disclose the revenues received from the vendors it ranks.

- Fair Disclosure on Evaluation Scores - The tech industry would benefit if Gartner were required to disclose more data in its evaluation process and disclose component scores so vendors know exactly where they are lacking and by how much and take corrective action. Currently, there is zero disclosure, which can lead to arbitrary placement, with no recourse and no basis for appeal.

- Better Oversight -Gartner currently has an employee act as ombudsman to handle disagreements. The conflict of interest is self-evident in the way ZL's concerns were summarily dismissed with little supporting evidence. There is a crying need to establish an impartial ombudsman similar to those found in public media, in order to ensure purchasers that they are receiving impartial analysis.

The legal documents are here: ZL v. Gartner Court Documents | ZL Technologies

Gartner and other analyst and market research firms have long denied that their analysis is biased by their client base.