Global tech outage eases after major disruption; focus now to check risks

Services across various sectors, including airlines, healthcare, shipping, and finance, began resuming normal operations on Friday after a security software update error caused widespread global computer system outages. This incident underscores the vulnerability of interconnected technologies worldwide.

As a fallout of the outage, businesses are grappling with backlogs of delayed and canceled flights, medical appointments, missed orders, and other issues that may take days to resolve. There are also growing concerns about how to prevent future disruptions caused by technology designed to protect systems.

A software update from CrowdStrike, a leading global cybersecurity firm, triggered the outages, affecting flights, broadcasters, and services like healthcare and banking. FedEx experienced significant disruptions, and Meta's Facebook content moderators were also impacted. Although not a household name, CrowdStrike is an $83 billion company with over 20,000 global subscribers, including major clients like Amazon and Microsoft.

CEO George Kurtz acknowledged on social media platform X that a defect in a "single content update for Windows hosts" was responsible for the issues affecting Microsoft customers. "We are 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's market dominance has led to questions about whether control over such critical software should be concentrated among a few companies. The outage highlighted that many organisations are unprepared for contingencies when a crucial

IT system or software component fails. Experts warn that similar outages will recur unless more robust backup and contingency measures are implemented. In response to the incident, CrowdStrike shares dropped 11 per cent, while rivals SentinelOne and Palo Alto Networks saw their shares rise by 8 per cent and 2 percent, respectively. Microsoft shares fell by 0.7 per cent.

Ann Johnson, head of Microsoft's security and compliance business, stated that the full impact of the outage is not yet quantifiable, as it affected only systems running CrowdStrike software. "We have hundreds of engineers working directly with CrowdStrike to get customers back online," she said.

President Joe Biden was briefed on the situation, according to a White House official. The US Cybersecurity and Infrastructure Security Agency observed hackers exploiting the outage for phishing and other malicious activities. US Customs and Border Protection reported processing delays, while the Dutch and United Arab Emirates' foreign ministries also experienced 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. He added that CrowdStrike and Microsoft must work diligently to prevent similar failures in the future.

The outage contributed to a decline in Wall Street's main indexes on Friday, exacerbating a sell-off in tech stocks and mixed earnings reports. The Cboe Volatility Index (VIX), known as Wall Street's "fear gauge," reached its highest level since early May, and the dollar strengthened as the cyber outage unsettled investors.

( With Reuters inputs)