Global tech outage disrupts industries, highlights risks of interconnected world

(Reuters) -A global tech outage on Friday crippled industries from travel to finance before services started coming back online after hours of disruption, highlighting the risks of a global shift toward digital, interconnected technologies.

A software update by global cybersecurity firm CrowdStrike triggered systems problems that grounded flights, forced broadcasters off air and left customers without access to services such as healthcare or banking.

Accelerated by the COVID-19 pandemic, 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, an $83 billion company that is not a household name, but has more than 20,000 subscribers around the world including tech giants like Amazon.com and Microsoft. Crowdstrike 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 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’ “Today” program.

“Many of the customers are rebooting the system and it’s coming up and it’ll be operational.”

CrowdStrike shares plunged, but pared losses and were down 10.8% as of Friday afternoon. Its rivals were up, with SentinelOne shares gaining 8.8% and Palo Alto Networks up 1.5%. Microsoft was down about 1%.

Microsoft’s chief communications officer, Frank Shaw, said on X that the company was supporting customers as they recover their systems after the CrowdStrike update brought down “a number of Windows systems globally.”

“I’m struggling to think of an outage at quite this scale.” said Ciaran Martin, professor at Oxford University’s Blavatnik School of Government and former head of the UK National Cyber Security Centre.

U.S. President Joe Biden has been briefed on the outage, a White House official said. U.S. Secretary of State Antony Blinken said his understanding was the global tech outage was not a malicious attack. However, the U.S. Cybersecurity and Infrastructure Security Agency said it has observed hackers using the outage for phishing and other malicious activities.

Even as companies and institutions began restoring regular services, experts said the outage revealed the risks of an increasingly online world.

“This event is a reminder of how complex and intertwined our global computing systems are and how vulnerable they are to a mistake and an error,” said Gil Luria, senior software analyst at D.A. Davidson.

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“While most companies don’t really have an alternative to Microsoft, they do have alternatives for security.”

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, 2,691 have been cancelled globally and more are expected to be called off, 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.

LSEG Group, which runs the London Stock Exchange, said its Workspace news and data platform, regulatory news service and currency spot and forward prices had been affected by the outage. By midday, most of those issues seemed to have been resolved.

The New York Stock Exchange and Nasdaq said U.S. markets were operational and working normally.

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.

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 air and apologized for being unable to transmit live. Soccer club Manchester United said on X that it had to postpone a scheduled release of tickets.

Jail cameras, arrest processing software and other New York City governmental functions were affected by the outage on Friday, but 911 and emergency systems remained untouched, the New York Post reported.

As the day progressed, more companies reported a return to normal service, including Spanish airport operator Aena, U.S. carriers American Airlines, Frontier and Spirit, Dubai International Airport operator 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, adding that the Federal Aviation Administration did not appear impacted.

(Reporting by Reuters bureaus; Writing by Tomasz Janowski, Emelia Sithole-Matarise and Nick Zieminski; Editing by David Gaffen, Emelia Sithole, Kirsten Donovan and Matthew Lewis)