WEBVTT - After CrowdStrike, do we all need cash?

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<v Speaker 1>You can listen to the Front on your smart sneaker

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<v Speaker 1>every morning to hear the latest episode. Just say play

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<v Speaker 1>the news from The Australian. From the Australian, Here's what's

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<v Speaker 1>on the Front. I'm Claire Harvey. It's Monday, July twenty two.

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<v Speaker 1>One in three millennials aged eighteen to thirty four have

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<v Speaker 1>skipped meals to save money in the past twelve months.

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<v Speaker 1>As the cost of living crisis bites in Middle Australia.

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<v Speaker 1>More than half of households have cut food spending and

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<v Speaker 1>a quarter have dropped doctor's visits. That exclusive survey is

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<v Speaker 1>live now at the Australian dot Com dot a You

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<v Speaker 1>taxpayers have spent more than four million dollars for CrowdStrike,

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<v Speaker 1>the company behind Friday's catastrophic global internet outage, to protect

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<v Speaker 1>the Department of Defense, spy agencies and the Future Fund.

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<v Speaker 1>In today's episode, the outage exposed how much we rely

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<v Speaker 1>on electronic transactions. So is this a moment for cash

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<v Speaker 1>to return? In nineteen ninety eight, in New Zealand's biggest city, Auckland,

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<v Speaker 1>the power went out and it stayed out, not for

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<v Speaker 1>a few hours or a couple of days, for five weeks.

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<v Speaker 1>Here's how Radio New Zealand and TV three captured the drama.

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<v Speaker 2>This is Morning Report with Jeff Robinson and Shawn Plunkett

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<v Speaker 2>in Auckland on Monday, February twenty third, the day Auckland

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<v Speaker 2>City stood still. The hot and dry weather in Auckland

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<v Speaker 2>over January and February appears to have been the trigger

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<v Speaker 2>for the cables to fail one after the other.

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<v Speaker 3>Emergency services tackling a freak electricity crisis that has paralyzed

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<v Speaker 3>the center of Auckland said today that health and safety

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<v Speaker 3>issues were now paramount.

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<v Speaker 1>Restaurants, schools, TV stations, every shop, every street light. The

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<v Speaker 1>main drag Queen Street roared with the sound of diesel generators.

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<v Speaker 1>New Zealanders still keep their kitchen drawers full of candles

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<v Speaker 1>and matches. The Auckland power outage was one of those

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<v Speaker 1>moments when you realize the layer of modernity that protects

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<v Speaker 1>us is pretty thin.

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<v Speaker 4>It's just unbelievable.

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<v Speaker 1>Jared Lynch is, The Australian's Technology editor. On Friday afternoon,

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<v Speaker 1>that glimpse of life without modernity happened to the whole world.

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<v Speaker 2>The catastrophic failure caused chaos of banks, businesses and airports

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<v Speaker 2>across the globe.

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<v Speaker 3>A massive worldwide computer outage cripples US hospitals, banks, and airlines.

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<v Speaker 4>A simple security update triggered a worldwide tsunami of technological breakdown.

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<v Speaker 1>The problem with technology, if it's good, is that it's

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<v Speaker 1>adopted in such a widespread way that we become completely dependent.

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<v Speaker 2>It was getting towards late on a Friday afternoon, so

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<v Speaker 2>you were looking forward to being able to knock off work,

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<v Speaker 2>and then I couldn't access our work system to file

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<v Speaker 2>a story, and.

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<v Speaker 4>I thought it was my computer because I was working

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<v Speaker 4>from home.

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<v Speaker 1>In the next few moments, Jared texted his colleagues at

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<v Speaker 1>The Australian to see if anyone else had the same problem,

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<v Speaker 1>and they did, and then one said something that really

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<v Speaker 1>got Jared's attention. A colleague said he just tried to

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<v Speaker 1>return an item to a Bunning's hardware store and they

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<v Speaker 1>said their systems were down.

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<v Speaker 4>I thought, well, is that a coincidence or it's a

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<v Speaker 4>bit odd. I rang up Bunnings.

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<v Speaker 2>I said what's going on and they said, oh, it's

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<v Speaker 2>one of our supply It's called CrowdStrike. I said, ah, okay,

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<v Speaker 2>So then I went on down detector and just saw

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<v Speaker 2>dozens of Australian companies. I had this massive spike in

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<v Speaker 2>out each activity and thought, we have a problem here.

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<v Speaker 1>So what were the next steps for you as a reporter?

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<v Speaker 2>It was just to do good old fashioned shoe lever

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<v Speaker 2>reporting and that was just to ring up all these

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<v Speaker 2>companies that were on down detector saying what's going on?

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<v Speaker 2>And oddly some of the companies said, what are you

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<v Speaker 2>talking about. More troubling though, is when I actually ran CrowdStrike,

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<v Speaker 2>because I were my first porter call. I rang their

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<v Speaker 2>agency here in Australia to say, look, there's this problem.

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<v Speaker 4>What's going on? They said, what problem?

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<v Speaker 2>And I said, there's dozens of Australian companies that are

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<v Speaker 2>reporting outages.

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<v Speaker 4>You haven't heard about this?

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<v Speaker 1>No?

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<v Speaker 2>And they said have you spoken to these companies? I said, yeah,

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<v Speaker 2>I've spoken to a few of them. Don't you know

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<v Speaker 2>what's going on?

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<v Speaker 4>No? No, no, no, no.

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<v Speaker 2>And it was another five hours until I got a

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<v Speaker 2>response from CrowdStrike. Now that's just not acceptable and it

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<v Speaker 2>just exposes a gaping flow in our sovereign it capability.

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<v Speaker 4>I mean, I grew up in the country Clare.

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<v Speaker 2>There was the old saying right, you buy a car

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<v Speaker 2>from the local car dealer because if something goes wrong,

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<v Speaker 2>you can take it to the car dealer and they'll

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<v Speaker 2>fix it. In this case, there are reports that Sydney's

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<v Speaker 2>CrowdStrike office was deserted on Friday afternoon. All these companies

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<v Speaker 2>couldn't pick up the phone to someone to say what's

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<v Speaker 2>going on, and in this day and age, that's just

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<v Speaker 2>not acceptable.

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<v Speaker 1>The CrowdStrike incident lasted less than twenty four hours in

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<v Speaker 1>its most intense phase, but there are computers and laptops

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<v Speaker 1>all around the world that will have to be manually

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<v Speaker 1>rebooted by IT staff, a process likely to take days

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<v Speaker 1>or weeks. Most big companies in Australia, from Quantas to

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<v Speaker 1>Woolies and Coal's and our own company, News Corp Australia

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<v Speaker 1>engages CrowdStrike to provide a product called Falcon, which sits

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<v Speaker 1>on the laptops and desktop computers. Falcon's job is to

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<v Speaker 1>protect the user's system from attack. That means CrowdStrike has

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<v Speaker 1>to interact with whatever system of software is on the

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<v Speaker 1>laptop or desktop, like Microsoft Windows or Apple's iOS. Here's

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<v Speaker 1>Crowdstrike's chief executive George Kurtz. Later on Friday explaining what

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<v Speaker 1>went wrong.

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<v Speaker 3>We're deeply sorry for the impact that we've caused customers,

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<v Speaker 3>to travelers, to anyone affected by this, including our companies.

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<v Speaker 3>So we know what the issue is. We're resolving and

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<v Speaker 3>have resolved the issue now. The system was sent an

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<v Speaker 3>update and that update had a software bug in it

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<v Speaker 3>and caused an issue with the Microsoft operating system. That

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<v Speaker 3>was the extent of an issue. The issue in terms

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<v Speaker 3>of a bug.

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<v Speaker 4>That was related to our update.

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<v Speaker 1>Friday's outage only affected devices running Microsoft Windows. And that's

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<v Speaker 1>interesting because CrowdStrike has had serious beef with Microsoft going

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<v Speaker 1>back months after the break. So how crowdstrikes aggressive attacks

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<v Speaker 1>on Microsoft have come back to bite it? Plus, is

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<v Speaker 1>this a moment for cash to come back? The best

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<v Speaker 1>coverage of tech is in the Australian twenty four to seven.

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<v Speaker 1>You can join our subscribers at the Australian dot com

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<v Speaker 1>dot au and we'll be back after this break. One

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<v Speaker 1>of the reasons Crowdstrike's outage is interesting is that crowdstrikes

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<v Speaker 1>style until now has been elbows out criticizing other organizations

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<v Speaker 1>and particularly Microsoft, for their approach to safety.

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<v Speaker 4>It's quite funny there's been this argibargie.

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<v Speaker 2>That's been happening between CrowdStrike and Microsoft for quite some time.

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<v Speaker 2>Crowdstrike's chief executive, George Kurtz, has been very quick to

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<v Speaker 2>throw at Microsoft, particularly around cybersecurity, and last year on

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<v Speaker 2>an earning's call, he said they've been operating the same

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<v Speaker 2>filed model that McAfee and simtech have been using for

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<v Speaker 2>the past twenty five years now. If you think the

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<v Speaker 2>main thing that keeps executives up at night is a

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<v Speaker 2>cyber breach, a mass disruption like this, if you hear

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<v Speaker 2>those sort of comments, you think, oh, well, these people

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<v Speaker 2>kind of know what they're talking about. And indeed their

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<v Speaker 2>growth has actually been phenomenal. Their share prices more than doubled,

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<v Speaker 2>their annual revenue has been growing at a rate of

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<v Speaker 2>sixty four percent. They've had this stunning reputation until now.

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<v Speaker 2>So companies have been using CrowdStrike as a way to

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<v Speaker 2>fend off cyber attacks denial of service, which is similar

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<v Speaker 2>to what we saw on Friday, where people's laptops are

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<v Speaker 2>rendered useless. They couldn't access their systems. Even though this

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<v Speaker 2>wasn't a cyber attack, it had that effect. But the

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<v Speaker 2>last thing they thought is the company that should be

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<v Speaker 2>defending this. This sort of activity and disruption would achieve

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<v Speaker 2>just that virus software upgrade.

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<v Speaker 1>So it must be pretty embarrassing for CrowdStrike that it's

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<v Speaker 1>actually an update that they tried to execute that has failed.

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<v Speaker 1>Or do you think this goes back to the same issue.

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<v Speaker 1>They will continue to blame Microsoft for having inadequate systems

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<v Speaker 1>because this upgrade didn't affect iOS for example, did it No, I.

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<v Speaker 2>Don't think they can blame Microsoft for this. It was

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<v Speaker 2>their software upgrade, and the software upgrade basically affected the

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<v Speaker 2>brain of Windows, which caused all these Windows based PCs,

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<v Speaker 2>laptops and other devices to render what is known the

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<v Speaker 2>blue screen of Death, and people just couldn't access them.

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<v Speaker 2>They couldn't do their work, and across the globe there's

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<v Speaker 2>reports that companies have lost billions of dollars as a

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<v Speaker 2>result of this.

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<v Speaker 1>Many of those companies will now seek compensation. Organizations that

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<v Speaker 1>are planned for an outage, like Triple O. Dispatching services

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<v Speaker 1>which quickly shifted to pen and paper were okay, but

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<v Speaker 1>in today's cash free world, many companies had no backup

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<v Speaker 1>plan at all.

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<v Speaker 4>Technology is fantastic.

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<v Speaker 2>It does make our lives easier and You can go

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<v Speaker 2>out for a run with only an Apple Watch and

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<v Speaker 2>be able to go buy yourself a coffee with a tap.

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<v Speaker 2>You don't have to be carrying your phone or a

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<v Speaker 2>wallet with your coins.

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<v Speaker 4>Jingling a round.

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<v Speaker 2>Has become that easy for us to transact in this

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<v Speaker 2>modern age, and technology has become as essential to our

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<v Speaker 2>economy as running water. The problem is is when it sneezes,

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<v Speaker 2>we all catch a cold, and it's a reminder that well, actually,

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<v Speaker 2>maybe we should have a few hundred dollars stashed away

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<v Speaker 2>somewhere in the house or in our wallet. Cash is king,

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<v Speaker 2>and there's a reason why it is so.

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<v Speaker 1>Finally, Jared, what do you think happens to CrowdStrike now?

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<v Speaker 1>Is this a fatal blow for this company or are

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<v Speaker 1>they too deeply embedded in systems to suffer too much?

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<v Speaker 4>Well, the question is who else do you turn to?

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<v Speaker 2>No doubt, this has been a major blow to their reputation,

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<v Speaker 2>but they are a gorilla in this space. They've had

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<v Speaker 2>this problem, they don't want to have it happen again

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<v Speaker 2>because they've been talking a massive game and they've probably

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<v Speaker 2>got the best engineers in this space. So as frustrating

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<v Speaker 2>as it was, it could even be more frustrating to

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<v Speaker 2>be able to change, given how embedded they are.

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<v Speaker 1>Jared Lynch is The Australian's Technology editor. There's a major

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<v Speaker 1>change in the way Australians give birth. Just twenty percent

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<v Speaker 1>of babies will be born in private hospitals this year

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<v Speaker 1>amid a maternity care crisis. Find out more by joining

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<v Speaker 1>ours subscribers at the Australian dot com dot au