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CrowdStrike ( CRWD ) software update triggers outages for Microsoft ( MSFT )

users

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Systems coming back online, delays affect range of

industries

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Questions grow over whether cybersecurity is overly

concentrated

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CrowdStrike ( CRWD ) shares plunge 12%, cybersecurity rivals gain

July 19 (Reuters) - Services from airlines to

healthcare, shipping and finance were coming back online on

Friday after a mistake in a security software update sparked

hours-long global computer systems outages, another incident

highlighting the vulnerability of the world's interconnected

technologies.

After the outage was resolved, companies were dealing with

backlogs of delayed and canceled flights and medical

appointments, missed orders and other issues that could take

days to resolve. Businesses also face questions about how to

avoid future blackouts triggered by technology meant to

safeguard their systems.

A software update by global cybersecurity firm CrowdStrike ( CRWD )

, one of the largest operators in the industry,

triggered systems problems that grounded flights, forced

broadcasters off air and left customers without access to

services such as healthcare or banking. Global shipper FedEx ( FDX )

faced major disruptions and some moderators who police

content on Meta's Facebook were hit.

CrowdStrike ( CRWD ) is not a household name but it is an $83 billion

company with more than 20,000 subscribers around the world

including Amazon.com ( AMZN ) and Microsoft ( MSFT ).

CrowdStrike ( CRWD ) CEO George Kurtz said on social media platform X

that a defect was found "in a single content update for Windows

hosts" that affected Microsoft ( MSFT ) customers.

"We're deeply sorry for the impact that we've caused to

customers, to travelers, to anyone affected by this, including

our company," Kurtz told NBC News.

CrowdStrike ( CRWD ) has one of the largest shares of the highly

competitive cybersecurity market, leading some industry analysts

to question whether control over such operationally critical

software should remain with just a handful of companies.

The outage also raised concerns that many organizations are

not well prepared to implement contingency plans when a single

point of failure such as an IT system, or a piece of software

within it, goes down. But these outages will happen again,

experts say, until more contingencies are built into networks

and organizations introduce better back-ups.

CrowdStrike ( CRWD ) shares closed down 11%. Its rivals SentinelOne ( S )

shares closed up 8% and Palo Alto Networks ( PANW ) closed

up 2%. Microsoft ( MSFT ) closed down 0.7%.

The scale of the outage was massive, but not yet

quantifiable because it involved only systems that were running

CrowdStrike ( CRWD ) software, said Ann Johnson, who heads Microsoft's ( MSFT )

security and compliance business.

"We have hundreds of engineers right now working directly

with CrowdStrike ( CRWD ) to get customers back online," she said.

President Joe Biden was briefed on the outage, a White House

official said. The U.S. Cybersecurity and Infrastructure

Security Agency said it observed hackers using the outage for

phishing and other malicious activities.

U.S. Customs and Border Protection said it was experiencing

processing delays and working to mitigate issues related to

international trade and travel. The Dutch and United Arab

Emirates' foreign ministries also reported disruptions.

"This event is a reminder of how complex and intertwined our

global computing systems are and how vulnerable they are," said

Gil Luria, senior software analyst at D.A. Davidson.

"CrowdStrike ( CRWD ) and Microsoft ( MSFT ) will have a lot of work to do to

make sure that it won't allow other systems and products to

cause this kind of failure in the future," he said.

Wall Street's main indexes fell on Friday, deepening a

sell-off driven by tech stocks and mixed earnings. The Cboe

Volatility index, known as Wall Street's "fear gauge,"

hit its highest level since early May, and the dollar climbed as

the worldwide cyber outage unnerved investors.

THOUSANDS OF FLIGHTS CANCELED

Air travel was immediately hit, because carriers depend on

smooth scheduling that, when interrupted, can ripple into

lengthy delays. Out of more than 110,000 scheduled commercial

flights on Friday, 5,000 were canceled globally with more

expected, according to aviation analytics firm Cirium.

Delta Air Lines ( DAL ) was one of the hardest hit, with 20%

of its flights canceled, according to flight tracking service

FlightAware. The U.S. carrier said it expected additional delays

and cancelations potentially through the weekend.

Airports from Los Angeles to Singapore, Amsterdam and Berlin

said airlines were checking in passengers with handwritten

boarding passes, causing delays.

Banks and financial services companies warned customers of

disruptions and traders across markets spoke of problems

executing transactions. Insurers could face a raft of business

interruption claims.

U.S. healthcare providers reported that outages were

affecting call centers, patient portals and other operations.

Mass General Brigham in Boston said it was treating only urgent

cases while Tufts Medical Center warned that patients might

experience delays or need to be rescheduled.

In Britain, booking systems used by doctors were offline,

posts on X by medical officials said, while Sky News, one of the

country's major broadcasters, was taken off the air.

As the day progressed, more companies reported a return to

normal service, including Spanish airport operator Aena

, U.S. carriers United Airlines and American

Airlines ( AAL ), and Australia's Commonwealth Bank.

U.S. Transportation Secretary Pete Buttigieg said system

issues appeared to be resolving and transportation would

hopefully be back to normal by Saturday.