Tech firm sued by shareholders over IT global outage

Tech firm sued by shareholders over IT global outage
Reuters United Airlines employees wait by a departures monitor displaying a blue error screen.Reuters

A faulty CrowdStrike update crashed 8.5 million Microsoft Windows computers

CrowdStrike is being sued by its shareholders after a faulty software update by the cybersecurity firm crashed more than eight million computers and caused chaos around the world.

The lawsuit accuses the company of making “false and misleading” statements about its software testing.

It also says the company’s share price dropped 32% in the 12 days after the incident, causing a loss in market value of $25bn (£14.5bn).

CrowdStrike denies the allegations and says it will defend itself against the proposed class action lawsuit.

Meanwhile, the firm has said computers affected by the massive global IT outage are effectively now back to normal.

The US-based company stated that as of 5pm local time on Monday, 29 July (00:00, Tuesday GMT), the outage had been fixed – ten days after the incident began.

The suit filed in the Austin, Texas federal court, alleges that CrowdStrike executives defrauded investors by making them believe the company’s software updates were adequately tested.

The lawsuit is seeking an unspecified amount of compensation for investors who owned CrowdStrike shares between 29 November and 29 July.

It cites chief executive George Kurtz, who said in a conference call on 5 March that the firm’s software was “validated, tested and certified.”

CrowdStrike told BBC News that it disputes the claims.

“We believe this case lacks merit and we will vigorously defend the company,” a spokesperson said.

Meanwhile, the chief executive of Delta Air Lines, Ed Bastian, has said in an interview with business news channel CNBC that the disruption caused by the outage cost the airline $500m, including lost revenue and compensation to passengers.

Delta has reportedly hired a prominent lawyer and is preparing to seek compensation from CrowdStrike.

The faulty update on 19 July crashed 8.5 million Microsoft Windows computers around the world. The outage disrupted businesses and services, including airlines, banks and hospitals.

In a detailed review of the incident, CrowdStrike said there was a “bug” in a system designed to ensure software updates worked properly.

CrowdStrike said the glitch meant “problematic content data” in a file went undetected.

The company said it could prevent a repeat of the incident with better software testing and checks, including more scrutiny from developers.

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