Cyber shakedown
Hackers get paid at CDK
Good morning, threat trackers. This is your Stock Market Rundown for July 1st, 2024. Thanks for joining me for another week of finance follies. Let’s dig in:
TODAY’S TOP STORY: RANSOM ROULETTE
Some of the best software businesses out there aren’t consumer behemoths like Facebook and Google. They’re vertical software companies—businesses who build software for specific niches.
Software providers like Mindbody (for fitness studios), Guidewire (the insurance industry), and Amdocs (telecom billing) aren’t household names like the Silicon Valley giants. But they gush cash flow thanks to recurring revenue, and are mission-critical to the businesses they serve.
Another example of a vertical software business you’ve probably never heard of, unless you sell cars for a living: CDK. It makes the software that runs operations at 15,000 US auto dealerships. If you’ve bought a Ford, GM, or Mercedes-Benz vehicle, chances are you’ve interacted with CDK’s “dealer management system”.
Which is why it was a major disaster when a hack took down CDK’s entire system in mid-June. Dealerships couldn’t sell cars, schedule service appointments, or get parts. Brookfield, the public company that owns CDK, saw its stock take a hit as dealers scrambled to cope, with some resorting to manual paperwork.
A hacker group with ties to Russian cybercriminals claimed responsibility and demanded tens of millions in ransom. And it seems like CDK ponied up. Because just over a week after the initial hack, systems were slowly coming back online.
There’s a reason half of all hacked companies opt to pay up—weeks or months of disruption could permanently cripple their business. Guess that’s why CDK coughed up the ransom, even though it means some Russian cybercriminals will be upgrading from Ladas to Lamborghinis.
SO WHAT ELSE IS GOING ON?
Rite Aid has been rightsized: It’s emerged from bankruptcy with 700 fewer stores and a $2 billion debt haircut.
Major record labels are suing AI companies for using copyrighted songs to train their models, seeking up to $150,000 per copied song. Hmm, the same music industry that brought us sampling, ghostwriting, and autotune now has a problem with inauthenticity?
In what could be a devastating blow to the plus-sized clothing market, Ozempic maker Novo Nordisk is spending $4 billion to build a new US manufacturing facility for the drug.
The SEC has sued blockchain software firm Consensys, claiming it sold securities without registering as a broker. Good luck settling a cryptocurrency dispute by asking a judge who probably still uses a flip phone.
That’s it for today, homeslices; catch you on the flip side tomorrow AM. Yours in capitalism, The Axe
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