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00:00Flights grounded, banking and healthcare systems disrupted, even complications for the organizers
00:05of the Paris Olympics.
00:07That's all the result of a software update that wreaked havoc on Microsoft Windows operating
00:11systems.
00:13That update was to a product provided by cyber security firm CrowdStrike.
00:17The company's CEO was clear that it was not a security incident or a cyber attack.
00:22Microsoft says the issue has been fixed, though residual impacts continue to affect some customers.
00:29We can take a listen to some of those stranded airline passengers.
00:33We were meant to fly out at 5 and then about 20 minutes ago we got the announcement that
00:40it was cancelled.
00:41So yeah, we've just been hanging around really with no information.
00:45Right now what's interesting to watch is the airline have no idea what's happening because
00:52it is such an issue that they don't have a grasp on yet, at least here at the Minneapolis
00:56airport.
00:57So I see long queues now, I think it's going to take me at least 45 minutes, one hour to
01:01get into the airport.
01:02I don't know how long the security is going to take.
01:04And right now I'm not even sure of the impact on the timings of the flight as well.
01:09Well, for some analysis, we can cross to New York and speak to Dan Ives, Managing Director
01:13and Senior Equity Analyst at investment bank Wedbush Securities.
01:17Thank you so much for joining us.
01:19We were hearing there from airline passengers, havoc in the airline industry, but also the
01:24banking sector.
01:25As someone from banking, can you start by explaining the impact this outage had on the
01:30banking system?
01:31Yeah, look, this is a black eye, not just for CrowdStripe, but I think for the cybersecurity
01:37industry.
01:38Look, this is the biggest IT outage in the history of the world.
01:43And the impacts there are just massive, especially in this interconnected world that we live
01:47in.
01:48We see it across banking, across airlines, transportation and others.
01:52This is going to be, you know, I think an uphill battle over the coming weeks and months,
01:57especially for CrowdStrike, given the PR nightmare.
02:00Yeah, CrowdStrike, the cybersecurity firm whose update caused this incident, they've
02:05already seen their stock tumble some 14 percent.
02:08Just how damaging do you think this is going to be for them?
02:12Look, this is something I don't think longer term that this changes the trajectory of the
02:18company.
02:19But in the near term, it's a code red situation.
02:22I mean, this is the worst nightmare for any company.
02:25CrowdStrike's been gold standard when it comes to cybersecurity.
02:28And from a brand perspective, that's going to be the big thing.
02:32It's not necessarily just legal and all the lawsuits that will come out.
02:36It's about brand and reputation.
02:39And is it damaging for Microsoft as well?
02:42I think Microsoft just caught in the fray.
02:44I mean, this is an update that ultimately just went to their operating system.
02:47So I think it's pretty clear it's on Microsoft's issue.
02:49Now, with that said, I think Microsoft, they're not just going to take this standing down.
02:54I mean, they're going to look closely at future updates.
02:58Does this ultimately catalyze Microsoft to maybe acquire a cybersecurity company, do
03:02more themselves?
03:03We're going to see that potential with Google and Wiz.
03:07This is definitely ripple effects that we'll see for many years.
03:11And are CrowdStrike and Microsoft, do you think, going to face major repercussions from
03:15their clients?
03:16I know you mentioned lawsuits.
03:17You know, could airlines, for example, demand damage payments?
03:20Oh, yeah.
03:21I mean, if you're a lawyer for CrowdStrike, I don't think you're going to be enjoying
03:26the rest of the summer.
03:28So this is something that's going to continue, I think, for years.
03:30Clearly, there's going to be legal issues.
03:33They'll probably be called in D.C. in some hearing.
03:37It's the biggest outage ever and around the globe.
03:40And that's something where no company wants to be involved in that, let alone CrowdStrike,
03:45which has been one of the best tech companies in the world.
03:49And what do you think has to change to prevent incidents like this from happening again in
03:52the future?
03:54I think it's really bad updates.
03:55There needs to be some vetting system, an extra layer to make sure nothing like this
04:01could happen again.
04:02It shows the vulnerability.
04:04And right now, if you're in an airport, you've missed your flight.
04:07The point is CrowdStrike now becomes a household name, but not in a video way, in a good way,
04:12in a bad way.
04:13And I think something needs to change in terms of updates.
04:16That's on Microsoft.
04:17I think other tech companies are going to look at closely over the coming months.
04:22And is there any way that consumers can protect themselves from incidents like this, or we're
04:25all just sort of at the whims of those bigger tech companies?
04:29It's like being stuck in traffic with nowhere to go.
04:33And that's part of the issue, is that we rely on these tech companies, that this does not
04:39happen.
04:40But like I said, it's just a disaster of epic proportions from an IT perspective.