Wednesday, 20 January 2021 09:53

Nutanix statement suggests VMware lawsuit designed to 'hurt a competitor'

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Image created using Rajiv's LinkedIn photo, official logos and images from Pixabay Image created using Rajiv's LinkedIn photo, official logos and images from Pixabay

Since December 2020, Rajiv Ramaswami, the former COO of Products and Cloud Services at VMware, has been the President and CEO of Nutanix, with a lawsuit now underway.

On December 28, 2020, VMware issued a statement regarding litigation against Rajiv Ramaswami.

In the statement, VMware said: "Rajiv Ramaswami failed to honour his fiduciary and contractual obligations to VMware. For at least two months before resigning from the company, at the same time he was working with senior leadership to shape VMware’s key strategic vision and direction, Mr. Ramaswami also was secretly meeting with at least the CEO, CFO, and apparently the entire Board of Directors of Nutanix, Inc. to become Nutanix’s Chief Executive Officer. He joined Nutanix as its CEO only two days after leaving VMware.

"Mr. Ramaswami demonstrated poor judgement and had a clear and extended period of conflict of interest. He should have disclosed this conflict of interest to VMware so that the company could have taken steps to protect itself. But he did not notify VMware, and thus deprived the company of the ability to do so by concealing his Nutanix-related activities."

The statement continued: "VMware expects all employees to honor their commitments to the company, and executive officers should be held to an even higher standard.

"VMware is not a litigious company by nature. Indeed, the company tried to resolve this matter without litigation. But Mr. Ramaswami and Nutanix refused to engage with VMware in a satisfactory manner.

"VMware spends billions of dollars on its roadmap and R&D to bring market innovations to our customers and is committed to protecting our brand, the technological innovations behind our brand, and the value we bring to our customers."

In response, on December 29, 2020, Nutanix released its own statement regarding the VMware lawsuit which said:

"VMware’s lawsuit seeks to make interviewing for a new job wrongful. We view VMware’s misguided action as a response to losing a deeply valued and respected member of its leadership team.

"Mr. Ramaswami and Nutanix have gone above and beyond to be proactive and cooperative with VMware throughout the transition. Nutanix and Mr. Ramaswami assured VMware that Mr. Ramaswami agreed with his obligation not to take or misuse confidential information, and VMware does not contend otherwise.

"However, VMware requested that Mr. Ramaswami agree to limit the ordinary performance of his job duties in a manner that would equate to an illegal non-compete covenant, and it requested that Nutanix agree not to hire candidates from VMware in a manner that Nutanix believes would be contrary to the federal antitrust laws.

"Mr. Ramaswami is proud of his tenure at VMware and counts many VMware team members as friends. It is disappointing to see VMware’s management sue him just because he chose to pursue an opportunity to become a public company CEO. We believe that VMware’s action is nothing more than an unfounded attempt to hurt a competitor and we intend to vigorously defend this matter in court," the statement concluded.

There is no update on legal proceedings as yet, but as competitors in a post-COVID world where business has been affected as never before, and there's still no true end to the economic downturn in sight, the legal teams on this case are certainly getting quite an economic stimulus.

No doubt the customers of both companies hope the lawsuit doesn't impact on customer service or innovation, and ultimately strengthens competition even more than it strengthens the bank balances of legal firms as both companies seek to emerge stronger from adversity.

 


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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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