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HomeMarketRackspace Blames Ransomware Attack For Ongoing Email Outage

Rackspace Blames Ransomware Attack For Ongoing Email Outage

Rackspace said the ransomware attack could result in lost revenue for its hosted exchange business, which generates about $30 million a year.

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Rackspace
Technology has disclosed the service outage that has been affecting thousands of the company’s email customers since late last week was caused by a ransomware attack.

As reported on Monday, the outage involves the tech infrastructure company’s
Microsoft
Exchange hosting business, which provides customers with Microsoft email, calendar, and contact software. On Friday, Rackspace (ticker: RXT) posted a notice on its status page saying that due to a “security incident” it had “powered down and disconnected” its Exchange service.

Rackspace has been encouraging customers to switch to Microsoft 365, a cloud-based version of the software giant’s communications suite. It’s not an easy fix. Rackspace has noted in a series of updates to its status page that to make the switch, customers would need to manually set up accounts for each individual user.

Rackspace said it was reaching out to all affected customers to help them work through the changeover.

Twitter is littered with complaints from Rackspace customers who are struggling to get support from the company to make the switch, with some hiring third-party IT support to help with the change.

Rackspace has not provided any details on the ransomware incident. Typically, ransomware perpetrators gain control of the target’s systems, threatening to destroy or publicize data unless a substantial payment is made, often in cryptocurrency.

Rackspace has not disclosed the number of customers affected by the attack, or detailed whether those users are at risk of losing email, calendar inputs, and contact records.

Rackspace has not said whether it will pay any requested ransom to the attackers.

Rackspace disclosed that the incident could result in lost revenue for its hosted exchange business, which generates about $30 million a year. The company added that it could have incremental costs associated with its response to the incident.

The company also said it has hired “a leading cyber defense firm” to investigate the attack.

In a status update on Monday night, Rackspace noted that customers who had subscribed to its archive service for their mailbox can recover their old data and import it into Microsoft 365—but that implies some customer data was not archived, and won’t be accessible for an unknown period.

Rackspace shares, which fell more than 15% on Monday, were about flat in early trading Tuesday.

Write to Eric J. Savitz at eric.savitz@barrons.com

Credit: marketwatch.com

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