CrowdStrike, a leading cybersecurity firm, is facing a class-action lawsuit from its shareholders after a faulty software update caused a global outage that affected over 8.5 million Microsoft Windows computers.
On July 19, the global outage led to widespread disruptions in businesses and services across various sectors, including airlines, banks, and hospitals.
The lawsuit has been filed in federal court in Austin, Texas.
According to BBC News, it accuses CrowdStrike of making "false and misleading" statements about the adequacy of its software testing processes.
Shareholders allege that the company's executives misled investors into believing that its software updates were thoroughly validated and tested. This, in turn, led to a major loss in market value when the update caused a global outage.
The plaintiffs state that the company's share price dropped by 32% in the 12 days following the incident, resulting in a $25 billion loss in market value.
The lawsuit specifically cites a March 5 conference call in which CrowdStrike's CEO, George Kurtz, assured that the firm's software was "validated, tested, and certified."
CrowdStrike has denied the allegations.
A company spokesperson told BBC News, "We believe this case lacks merit, and we will vigorously defend the company."
The outage had far-reaching consequences, with Delta Air Lines being one of the most severely affected businesses.
Delta's CEO, Ed Bastian, revealed in an interview with CNBC that the disruption cost the airline approximately $500 million in losses, including lost revenue and compensation to passengers.
Delta is reportedly preparing to seek compensation from CrowdStrike.
Details of the Incident
According to a detailed review released by CrowdStrike, the outage was caused by a "bug" in a system designed to ensure the proper functioning of software updates.
The glitch allowed "problematic content data" in a file to go undetected, leading to the widespread crash of millions of computers.
CrowdStrike has acknowledged the issue and stated that it is implementing better software testing and checks to prevent a similar incident in the future.
