The Economic Impact Of A Global Tech Outage

July 19, 2024, will go down in infamy as the day that Americans woke up to massive airline delays, canceled medical appointments, an inability to access banks or other financial services providers, and more. The reason? A global technology outage that's being blamed on a faulty software update.

To be more specific, the software update was issued by cybersecurity firm CrowdStrike (one of the most popular in the world) and affected computers running Microsoft's Windows operating systems. Which is to say, a massive number of machines. Though CrowdStrike acknowledged the error, it also wanted to be clear that this was indeed just an error and not the result of hackers or a cyberattack.

Reported by The Associated Press, "Long lines formed at airports in the U.S., Europe, and Asia as airlines lost access to check-in and booking services at a time when many travelers are heading away on summer vacations. Hospitals and doctors' offices had problems with their appointment systems, and canceled non-urgent surgeries. Several TV stations in the U.S. were also prevented from airing local news early Friday."

According to the flight tracking site Flightaware, over 2,000 flights were canceled in the United States alone due to the tech outage, leaving some passengers stranded. A further 5,373 U.S. flights experienced delays, and worldwide, the number of flight delays had surpassed 29,000 as of 12 p.m. Eastern time. Pete Buttigieg, the United States secretary of transportation, said he expects air travel to "resemble normal" by Saturday and assured the nation's air traffic control systems hadn't been affected by the outage.

Besides airlines, other forms of transportation have also been impacted by the July 19 outage. For example, the District of Columbia's subway system was shut down for several hours Friday, as were two New York-area cargo shipping terminals. Shipping services such as UPS and FedEx (by the way, is UPS or FedEx cheaper?) are also reporting service delays, so you may have to wait a little while longer to receive the deals you bought during the recently ended Amazon Prime Day (here's how much Americans spend each year during the event).

This massive global outage serves as a stark reminder just how reliant the world has become on technology and the internet to accomplish even basic tasks. The situation is further complicated, however, because so many business systems are running the same exact software, so outages aren't contained to a select few organizations. For example, more than half of the nation's Fortune 500 companies use CrowdStrike's services. Besides huge financial impacts, hospital patients may not receive the proper care. In extreme cases, this could even lead to death. As well, emergency call lines like 911 to summon police and medical assistance were down across multiple states, including Alaska, Arizona, Indiana, New Hampshire, and Ohio.

Besides not being a good time to travel or get sick, the "blue screen of death" on July 19 has also impacted multiple financial services firms, including some on our list of the best investment apps for beginners. Some investors have reported via social media they're unable to access their brokerage accounts or make stock trades. The affected brokerages and banks included JP Morgan Chase, Bank of America, and Charles Schwab. Charles Schwab said on the social platform X that "certain online functionality may be intermittently slow or unavailable." It also cautioned its users not to place the same trade multiple times in the event that it doesn't seem to be going through, or else multiples of the same trade will be created.

It's still early to hazard a guess at the total amount of losses resulting from what's being called "the largest IT outage in history," but rest assured that it'll be measured well into billions of dollars for the affected companies. CrowdStrike itself has also lost considerable market cap, though its share price has stabilized somewhat from earlier on July 19. At around noon on Friday, shares of CrowdStrike were down approximately 10%, representing ~$8 billion worth of lost value. Meanwhile, shares of Microsoft were relatively unaffected, down 0.6%.