Global tech disruption eases after widespread disruption, new focus on risks

 

Airlines, healthcare, shipping and finance services came back online on Friday after a flaw in a security software update caused hours-long outages in global computer systems, another incident that highlights the vulnerability of the world’s interconnected technologies.

After the outage was resolved, companies found themselves dealing with flight delays and cancellations, doctor visits, lost orders and other issues that could have taken days to resolve.

Companies also face questions about how to avoid future blackouts triggered by technology designed to safeguard their systems.

A software update at global cybersecurity firm CrowdStrike (CRWD.O), opens new tab one of the industry’s largest operators, triggered system issues that grounded flights, forced broadcasters off the air and left customers without access to services like healthcare or banking. Global freight forwarder FedEx (FDX.N), opens new tab faced major outages and some moderators who monitor content on Meta’s Facebook were affected.

CrowdStrike is not a household name, but it is an $83 billion company with over 20,000 subscribers worldwide, including Amazon.com (AMZN.O), opens a new tab, and Microsoft (MSFT.O), opens a new tab.

CrowdStrike CEO George Kurtz said on social media platform X that a flaw had been found “in a single content update for Windows hosts” that affected Microsoft customers.

“We are deeply sorry for the impact this has caused to customers, travelers and anyone affected by this, including our company,” Kurtz told NBC News.

CrowdStrike has one of the largest shares of the 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 has also raised concerns that many organizations are not adequately prepared to implement contingency plans when a single point of failure, such as an IT system or software within it, fails.

But, experts say, these outages will happen again until more contingency measures are implemented in networks and organizations introduce better backups.

CrowdStrike shares closed down 11%. Shares of its rivals SentinelOne (SN), opens new tab closed up 8% and Palo Alto Networks (PANW.O), opens new tab closed up 2%. Microsoft closed down 0.7%.

The scope of the outage was massive, but not yet quantifiable because it only involved systems running CrowdStrike software, said Ann Johnson, head of Microsoft’s security and compliance division.

“We have hundreds of engineers right now working directly with CrowdStrike to get customers back online,” he 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 exploiting the outage for phishing and other malicious activities.

U.S. Customs and Border Protection said it has seen processing delays and is working to mitigate disruptions to international trade and travel.

The foreign ministries of the Netherlands and the United Arab Emirates also reported problems.

“This event reminds us of how complex and interconnected our global information systems are, and how vulnerable they are,” said Gil Luria, senior software analyst at DA Davidson.

“CrowdStrike and Microsoft will have a lot of work to do to ensure that no other systems and products are allowed to cause this type of error in the future,” he said.

Wall Street’s major indexes fell on Friday, deepening a sell-off led by technology stocks and mixed earnings.

The Cboe Volatility Index (.VIX), Opens a new tab, known as Wall Street’s “fear gauge,” hit its highest level since early May and the dollar rose as the global computer disruption unnerved investors.

● THOUSANDS OF FLIGHTS CANCELLED

Air travel has been hit immediately because carriers depend on a fluid schedule that, if disrupted, can result in lengthy delays. Of more than 110,000 commercial flights scheduled for Friday, 5,000 have been canceled globally, with more planned, according to aviation analytics firm Cirium.

Delta Air Lines (DAL.N), opens a new tab, 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 more delays and cancellations potentially over the weekend.

At airports from Los Angeles to Singapore, Amsterdam and Berlin, airlines checked passengers in with handwritten boarding passes, causing delays.

Banks and financial services firms have warned customers of disruptions, and traders across markets have reported problems executing trades. Insurance companies could face a raft of business interruption claims.

U.S. health care providers reported that the disruptions were affecting call centers, patient portals and other operations. Mass General Brigham in Boston said it was only treating urgent cases, while Tufts Medical Center warned that patients could be delayed or rescheduled.

In Britain, booking systems used by doctors were offline, according to posts on X by health officials, while Sky News, one of the country’s main television stations, was suspended.

As the day progressed, a growing number of companies reported a return to normal services, including Spanish airport operator Aena (AENA.MC), opens a new tab, US carriers United Airlines (UAL.O), opens a new tab and American Airlines (AAL.O), opens a new tab, and Australia’s Commonwealth Bank (CBA.AX), opens a new tab.

U.S. Transportation Secretary Pete Buttigieg said the system’s problems appear to be being resolved and that transportation is hoped to return to normal by Saturday. [Reuters]

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