How will the “largest IT outage in history” affect CrowdStrike’s reputation, customer base, and wallet? More importantly, who will pay?
So, That Was Bad
Most of the business world is still reeling from the disastrous software update that caused chaos by paralyzing millions of Microsoft computers worldwide.
The error kneecapped everyone from airports (more than 5,000 commercial airline flights were canceled globally) and hospitals to businesses and government agencies.
The Guilty Party
The culprit? Texas-based cybersecurity firm CrowdStrike, which is used by most of the global technology industry (like Microsoft) for its Falcon program designed to block malware and cyber-attacks.
IT’s Worst Nightmare
Following CrowdStrike’s Falcon update, the “blue screen of death” popped up on millions of Microsoft systems and Windows PCs, leaving them unusable in a repeating recovery boot.
One Tiny Error
The reason why computers running Microsoft crashed was due to an erroneous code update not interacting with Windows.
According to cybersecurity expert Troy Hunt, the disruptions could be dubbed the “largest IT outage in history.”
Call the President
According to White House officials, President Biden was briefed on the outage and his team was in contact with CrowdStrike and affected entities “to get sector-by-sector updates throughout the day…”
Not My Circus
Experts predict not only demands for remuneration from affected entities, but also lawsuits.
Dan Ives, a tech analyst for Wedbush Securities, stated: “If you’re a lawyer for CrowdStrike, you’re probably not going to enjoy the rest of your summer.”
Billion-Dollar Damages?
Although those in the know say that it’s too early to set an amount for the global catastrophe, the costs could easily exceed $1 billion.
That is according to Patrick Anderson, the CEO of Anderson Economic Group, a Michigan-based research firm that specializes in calculating the economic impact of events such as strikes and other business interruptions.
CEO Stocks Down
George Kurtz, CrowdStrike’s chief executive, lost about $300 million in just one day, thanks to CrowdStrike stock shares dropping 11% following the event.
A Little Slip
According to Forbes, Kurtz’s current fortune is approximately $2.9 billion after it was worth more than $3.2 billion prior to the crash. That’s because most of Kurtz’s wealth is invested in CrowdStrike stock.
A Global Expansion
In its 10+ years of business, the multibillion-dollar brand CrowdStrike has worked with various companies around the world. The result is that many more businesses and governments enjoy protection from cyber threats.
Too Much Power?
However, experts say that the concentration of power among a handful of companies in the antivirus and threat-detection industry poses its own set of risks.
Big-Name Brands
The total damage inflicted is yet to be determined. But it’s worth noticing that numerous Fortune 500 companies rely on CrowdStrike to protect them against viruses and hackers.
A Previous Outage
The CrowdStrike chaos follows only a month after another large outage: that at software provider CDK Global which suffered a cyberattack, according to the company. That outage led to disaster for US car dealerships, as they struggled to track customer interactions, orders, and sales.
They Did Pay
According to sources who spoke with CNN, it would seem that CDK Global paid a $25 million ransom to the hackers to halt the outage so business could resume as usual.
Relying Too Much on Tech?
The outage has shed new light on another less-considered topic: the fragility of the global economy and how it depends on computer systems.
Don’t Blame the Bots
Speaking to CNN, Costin Raiu, a longtime cybersecurity researcher, was quoted as saying: “[M]ost people believe that when the end of the world comes, it will be AI taking over some kind of nuclear power plant and shutting down electricity. While in reality, it’s more likely to be some kind of a little bit of code in a botched update, causing a cascade reaction in interdependent cloud systems.”
Busy Fixing It
In an interview on CNBC, Kurtz stated that the company is focused on fixing the issue and that most of their customers had been understanding.
A Word From the CEO
“My goal right now is to make sure every customer is back up and running,” Kurtz said. “I think many of the customers understand it’s a complex environment and staying one step ahead of the bad guys requires these content updates.”
Talk About Timing
Coincidentally, only last month a CrowdStrike executive spoke at an event and said the following: “We must develop code in a secure manner and verify its progeny… However, it is critical too that we deploy software in a resilient manner, one that reduces rather than increases risk in our digital ecosystems.”
Who Will Pay?
CrowdStrike did not address CNN’s question on whether it intends to provide compensation to impacted customers.
In a company statement released, and in Kurtz’s tweet, it was said: “CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts. … This is not a security incident or cyberattack.”
Not a Huge Loss… Right?
Currently, it’s unknown how many customers might abandon CrowdStrike. Ives from Wedbush Securities guesses less than 5% of its customers might ditch CrowdStrike. He added: “They’re such an entrenched player, to move away from CrowdStrike would be a gamble.”
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