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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 global digital outage disrupted computer systems

for hours, laying bare the vulnerability created by the world's

shift toward interconnected technologies following the COVID-19

pandemic.

After the outage was resolved, companies are now dealing

with backlogs of delayed and canceled flights and medical

appointments, missed orders and other issues that could take

days to resolve. They also face questions about how to avoid

future blackouts triggered by technology meant to safeguard

their systems.

An earlier 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.

Since the COVID pandemic broke out in 2020, governments and

businesses have become increasingly dependent on a handful of

interconnected technology companies over the past two decades,

which explains why one software issue rippled far and wide.

The outage shone a spotlight on CrowdStrike ( CRWD ), an $83 billion

company that is not a household name but has more than 20,000

subscribers around the world including Amazon.com 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 travellers, to anyone affected by this, including

our company," Kurtz told NBC News. "Many of the customers are

rebooting the system and it's coming up and it'll be

operational."

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 organisations introduce better back-ups.

CrowdStrike ( CRWD ) shares fell about 12%. Its rivals rose, with

SentinelOne shares gaining 8% and Palo Alto Networks

up 1.5%.

Microsoft ( MSFT ) was down 0.8%. It said it was supporting customers

as they recover their systems.

U.S. President Joe Biden was briefed on the outage, a White

House official said. Secretary of State Antony Blinken said his

understanding was the outage was not a malicious attack.

However, the U.S. Cybersecurity and Infrastructure Security

Agency said it observed hackers using the outage for phishing

and other malicious activities.

"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 - 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 CANCELLED

Air travel was immediately hit, as 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 have been cancelled globally with more expected,

according to aviation analytics firm Cirium.

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.

Government agencies were also affected, with the Dutch and

United Arab Emirates' foreign ministries reporting some

disruptions.

U.S. healthcare providers reported 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 may experience delays

or need to be rescheduled.

Insurers could face a raft of business interruption claims.

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

transportation system issues appeared to be resolving and would

hopefully be back to normal by Saturday.