On Friday, a single computer file buried in a defective software update caused a global IT outage that disrupted airports, banks, 911 services, hotels, trains, hospitals, restaurants, governments, and maybe even your afternoon with the so-called Blue Screen of Death. 

“This is basically what we were all worried about with Y2K, except it’s actually happened this time,” said web security expert Troy Hunt. Here’s what we know going into the week after Y24K.

Harm, Foul

CrowdStrike is an Austin-based cybersecurity firm with a $74 billion market cap that says it services over half the companies on the Fortune 1000 (both numbers potentially subject to downward revision). On Friday, CrowdStrike released an update to a cloud-based threat detection software for Microsoft Windows operating systems.

And then, disaster. The update, which doesn’t seem to have been adequately tested, crashed millions of Windows devices, taking down IT systems worldwide. Thousands of flights were delayed or canceled, thousands of shipments were grounded. Hospitals worked on paper and canceled surgeries, TV stations went off the air. And it’s not over: 

• CrowdStrike issued a fix, though it’s not yet available to all devices (CrowdStrike says an automatic fix is “close”). Microsoft, which said 8.5 million devices were affected, released its own tool on Saturday to help users resolve the issue.
• Experts expect it will take weeks for systems to fully recover: The UK National Health Service said Saturday that doctor appointments may be canceled this week, and over a thousand US flights were canceled on Sunday. Needless to say, the outage will cost the global economy billions, though it could amount to a blip — while CrowdStrike shares tanked 11% Friday, the Dow, S&P 500, and Nasdaq all slipped less than 1%.

Unwanted Attention: “These incidents reveal how concentration can create fragile systems,” tweeted Federal Trade Commission chair Lina Khan. Last year, the FTC solicited comments on “the business practices of major cloud providers” — even if CrowdStrike’s blunder is an economic blip, it could be a regulatory squeeze if the agency takes another look at that file.

London is known for more than a few things: red buses, black cabs, and suspiciously empty mansions owned by foreign millionaires. 

For decades now, the UK’s capital has been the world’s top spot for money laundering, but that could be changing. UBS reported earlier this month that the UK is due to see an exodus of millionaires, with roughly 17% of its two-comma inhabitants due to migrate. The chief economist at UBS Global Wealth Management told CNBC it’s not necessarily a terrible sign, as the UK always had a disproportionately high number of millionaires.

The World’s Laundromat

London’s status as a money-laundering hub started with Margaret Thatcher’s deregulation of financial services in the 1980s and then picked up steam under Tony Blair’s Labour government post-2008 as it chased foreign investment. Bion Behdin, chief revenue officer at anti-money laundering software company First AML, said London remains popular with money launderers due to “large volume of foreign direct investment, high house prices (great way to launder money) and safe stable currency with a lot of loopholes in current [anti money-laundering] legislation.”

But the winds are starting to shift — Putin’s invasion of Ukraine in 2022 threw London’s embrace of Russian millionaires into sharp relief, and the new Labour government is detering not just monied money launderers, but high-net-worth individuals in general:

• Alex King, a chartered accountant and founder at Generation Money, said the Labour government ending the previous “non-dom” tax status is the single biggest influencing factor. Non-doms are people who are tax-residents in the UK but don’t have to pay any tax on income made overseas — but the government is scrapping that perk.
• “Already, lots of non-dom individuals are considering leaving the UK or have already done so,” King said. “Through my financial consulting work it’s something I hear come up all the time, with lots of [high net worth] individuals looking at Monaco, Switzerland and the UAE as options to move to directly in response to the non-dom changes.”

King said Dubai, Singapore, and Hong Kong are increasingly seen as better places for people with “assets and location independence.” Robert Barrington, a professor of anti-corruption practice at the University of Sussex, told The Daily Upside that Dubai and Hong Kong in particular have seen an increase in capital flows from enterprises that use shell companies. 

Cleaning House: Barrington said he is “cautiously optimistic” that Keir Starmer’s Labour government will make London less attractive to money launderers. “I think Britain reached a low point, so the only way is up,” he said. Behdin said the UK government should consolidate its financial regulators. “Each sector, including law and accounting, has a number of different regulatory bodies. It’s a messy way to run an anti-money laundering regime because enforcement levels vary dramatically from sector to sector,” said Behdin. 

Maybe this is the espresso jolt Starbucks needed.

Activist investing firm Elliott Management has taken a significant stake in the behemoth coffee chain, according to a Wall Street Journal report, and has already begun pushing for strategic changes. Amid weak results, the company has been forced to slash its outlook twice so far this year — which means a turnaround effort may be a tall order. Or, wait. Do we mean venti order? Or grande? We can never keep it straight…

Starburst

Starbucks is a victim of its own success. At least, if you ask Starbucks. As the world transitioned out of the pandemic, the coffee chain’s to-go online ordering business took flight, and became the growth engine for the entire empire. But the success kneecapped stores and employees, with orders pouring in faster than they can be filled — especially as Starbies demand increasingly specific drinks. 

After all, making a Iced Caramel Macchiato with almond milk, two pumps of vanilla syrup, one pump of toffee nut syrup, extra foam, and light ice isn’t exactly simple, and it’s starting to have a material impact:

• In its second-quarter earnings report in April, Starbucks said that the rate of incomplete mobile orders had risen into the mid-teens.
• The company also said that occasional customers were visiting less often, with traffic dropping 7%. Overall, US same-store sales fell 3% year-over-year.

Coffee Chorus: The activists Elliott, who have in previous efforts successfully pushed for shake-ups at firms like Salesforce and Southwest Airlines, aren’t the only ones breathing down the necks of Starbucks’ C-suite. Former CEO Howard Schultz — who is no longer on the company’s board, but is listed as chairman emeritus and holds 2% stake in the company — posted an open letter to shareholders on LinkedIn earlier this year in which he criticized replacement CEO Laxman Narasimhan and company leaders. We’re guessing he didn’t get his coffee that day…