The National Security Organization (NSO) was about to sell hacking capabilities to France. The Israeli spyware company is currently in financial difficulty.


In July, allegations surfaced that malware from the NSO group was used to attack French President Emmanuel Macron, generating a massive outcry. The claims, which are part of a string of allegations against the Israeli hacker organization Pegasus Software, have been disputed by the company. Meanwhile, Israeli military leaders rushed to avoid a diplomatic problem by meeting with their French counterparts and promising to look into the allegations.

But sources close to the deal say the process collapsed after accusations that French politicians were potentially among those targeted, and negotiations broke down just days before the sale was due. (The French Foreign Ministry did not respond to our request for comment.)

At the same time, the MIT Technology Review learned, French government officials were in the final stages of contract negotiations to purchase the Pegasus hacking tools from NSO. The French were on the verge of buying the tool – in the type of deal that is typically worth millions of dollars – despite years of allegations that it was routinely used to monitor and harass dissidents, journalists and civilians. human rights activists around the world.

Another important relationship collapsed earlier this month, when the United States sanctioned NSO Group by adding it to its list of entities, imposing tough rules and restrictions on Americans buying or selling from the Israeli company.

While Israel has since managed to calm the situation with France, attempts to reestablish relations with the United States have been much more difficult.

The United States made this move because it said NSO builds and sells “spyware to foreign governments” who use it for malicious purposes. The action, the Commerce Department said in its announcement, “is part of the Biden-Harris administration’s efforts to put human rights at the center of U.S. foreign policy, including through to stem the proliferation of digital tools used for law enforcement purposes “.

Despite long and repeated attempts to communicate with Washington, the company has failed to establish meaningful contact with U.S. officials, according to people familiar with the effort. NSO is trying to reverse the sanctions, a process that involves filing a written appeal with the Commerce Department.

Company executives sent a letter to Israeli government officials asking for help in changing Washington’s decision, but they were told the United States was not discussing it with them either. In Jerusalem and Tel Aviv, Israeli officials feel compelled to guess why they were left in the dark about the decision to sanction NSO until the last second. Israel’s Foreign Ministry did not respond to a request for comment, while the US Department of Commerce explained the appeal process and timeline, but declined to comment on details of the NSO case.

Company employees, who spoke on condition of anonymity, say the sanctions and scandals have left NSO facing an existential crisis. NSO had not yet responded to a request for comment at the time of this article’s publication. NSO Group’s main product is Pegasus, a spy tool that has been the subject of worldwide criticism and demand for a decade. The program allows the owner to break into a target’s phone to listen to the victim and access everything on the device including messages, contacts, and photos. Many democratic countries have bought the product, including Germany, Spain and Mexico: officials in these countries say law enforcement and intelligence services need tools like Pegasus to monitor targets legitimate, such as members of organized criminal groups or terrorist networks. But critics say the tool gives carte blanche to spy without enough oversight and accountability, leading to regular abuse.

NSO has also sold Pegasus to several authoritarian countries, particularly in the Middle East and North Africa, and there are dozens of well-documented allegations of abusive behavior by its customers. For the most part, NSO has defended itself by saying it only builds tools and does not control what foreign governments choose to do with Pegasus, and it has continued to operate as normal.

The 2021 string of disclosures, however, hit her differently. The “NSO Case,” as this year’s attack on scandals in Israel is known, cost the company millions of dollars in lost sales. Reports earlier this year of widespread abuse made headlines around the world, but the company says the allegations are based on mistaking a standard database of phone numbers as spy targets of the NSO group.

The US sanctions had an immediate and far greater effect on the company than previous scandals. Bloomberg reported that Wall Street is avoiding NSO and treating it like a distressed asset; it is grappling with debt of over $ 500 million and a growing risk of insolvency; Meanwhile, the company’s newly appointed CEO resigned just a week after being appointed. Sanctions create practical restrictions on how the business can operate. For example, he cannot legally purchase many of the tools he uses to develop exploits, such as laptops with a Windows operating system or iPhones, without the explicit approval of the United States government. The United States has said its default decision on sales to NSO Group will be negative.

The US decision also has a deeper impact on the company. Morale is low and employees are devastated and confused, according to several people who spoke to MIT Technology Review on condition of anonymity. There is real and serious doubt at the highest level as to the future of NSO if it cannot get off the list of US entities. NSO’s ties to Israeli leadership also complicated the situation. Like many arms manufacturers, NSO Group has a very close relationship with its government and has proven to be a crucial political and diplomatic tool for Israel over the past decade. When NSO Group started selling hacking tools to the UAE government, for example, Benjamin Netanyahu, then Israeli prime minister, specifically insisted on the deal, according to people familiar with the sale.

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  • The National Security Organization (NSO) was about to sell hacking capabilities to France. The Israeli spyware company is currently in financial difficulty.
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