Investors sue Crowdstrike over global outage

Crowdstrike is being sued by its shareholders over the mass outage caused by a faulty software update from the cybersecurity firm.

The outage crashed more than eight million computers, causing chaos for flights, trains and businesses worldwide. The aftermath saw Crowdstrike’s share price drop by more than 32%, wiping more than $25 billion off the value of the company.

The outage was blamed on a faulty update in Crowdstrike’s EDR tool Falcon, running on Microsoft’s operating system, causing around 1% of all Windows computers to experience the so-called “blue screen of death”.

The lawsuit – filed in Austin, Texas by the Plymouth County Retirement Association in Massachusetts – claims Crowdstrike made “false and misleading” claims over its software testing, defrauding investors.

It asks the Texas Federal Court to grant an unspecified amount in damages to investors who owned shares in Crowdstrike between 29 November 2023 and 29 July.

CrowdStrike boss George Kurtz apologised to those affected and blamed a “software bug” but admitted it would take “some time” to fully fix the problems.

The lawsuit quotes statements from Kurtz during a conference call in March, in which he described the company’s software as “validated, tested and certified”.

Crowdstrike has claimed the suit “lacks merit” and said it plans to defend itself, but the cybersecurity firm could face further action from companies hit by the outage.

For example, the CEO of US airline Delta lashed out at Crowdstrike over the outage, claiming the meltdown cost the firm up to $500 million.

Ed Bastian told CNN: “They haven’t offered us anything. Free consulting advice to help us.”

He also criticised the vendor for its testing policy, adding: “If you’re going to have priority access to the Delta ecosystem in terms of technology, you’ve got to test this stuff.

“You can’t come into a mission critical 24/7 operation and tell us we have a bug. It doesn’t work.”

According to the report from CNN, Delta has hired the law firm of high-profile attorney David Boies to pursue compensation from Crowdstrike and Microsoft, though this has not been confirmed by the airline.

Following the outage, experts shared their key takeaways and advice to avoid future problems with TechInformed.