Malaysia demands compensation from Microsoft and CrowdStrike following global outage: Will others follow?

In a significant development, Malaysia has demanded compensation from Microsoft and CrowdStrike for a massive global outage that disrupted internet services and affected numerous industries. This high-profile case could set a precedent for how similar incidents are handled worldwide.

Last week, a severe outage caused by a faulty update led to widespread internet disruptions, particularly impacting computers running Microsoft’s Windows operating system. The incident affected various sectors and industries globally, leading to significant operational disruptions.

Malaysia’s Digital Minister, Gobind Singh Deo, has taken a firm stance on the matter, formally requesting both Microsoft and CrowdStrike to compensate for the damages incurred. In a statement, Deo emphasized the government’s commitment to resolving the issue and supporting affected entities.

If there are any damages or losses, where there have been any parties that have made such claims, I’ve asked them to consider those claims and see to what extent they are able to help resolve the issue.

The outage’s impact was substantial, affecting five Malaysian government agencies and nine other companies. While the exact financial losses remain undetermined, the Malaysian government is actively engaging with both companies to address the fallout and prevent future occurrences.

The disruption has also drawn attention from businesses beyond Malaysia. Tony Fernandes, CEO of Capital A airline, highlighted the broad impact of the outage on various industries.

The principle is that if we do something wrong, we have to compensate. We, other airlines, and other businesses lost a lot. They should offer us compensation, and right now, we have to wait and see.

Insurance industry braces for potential losses

One sector expected to bear a significant portion of the financial burden is the insurance industry. The outage’s impact on travel, business operations, and other areas will likely lead to substantial insurance claims. According to Fitch Ratings, the losses that insurance and reinsurance companies may face could range from mid to high single-digit billion dollars.

Samer Hasn, an analyst at XS, noted the complexity of assessing these losses due to the broad geographical scope and diverse industries affected.

It is not yet possible to determine who is responsible for bearing this burden due to its wide geographical scope and the multiple affected industries, each of which may be covered by a different type of insurance policies.

Samer Hasn, Analyst at XS

As companies around the world assess their losses, the full scale of the financial impact will become clearer. The incident underscores the need for robust contingency plans and insurance coverage to mitigate such widespread disruptions.

The Malaysian government’s demands for compensation from Microsoft and CrowdStrike mark a significant development in how major tech disruptions are addressed. As other affected entities evaluate their losses and consider similar claims, the case could set important precedents for future handling of global outages.

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