NSO was going to sell hacking tools to France. The Israeli spy company is currently in crisis.

For the most part, the NSO defended itself by saying that it was simply building the tools and had no control over what foreign governments decide to do with Pegasus, and continued to run its business as usual.

However, a series of revelations in 2021 had a different effect.

The “NSO affair,” as this year’s scandals are called in Israel, cost the company millions of dollars in lost sales. Earlier this year, it was reported that widespread abuse have made headlines around the world, but the company says the allegations are based on misidentifying the standard database of phone numbers as targets of NSO Group espionage.

The US sanctions have had an immediate and far greater impact on the company than previous scandals. Bloomberg reported that Wall Street avoids the NSO and views it as a distressed asset; it’s burdened $ 500 million in debt and the growing risk of insolvency; Meanwhile, the company’s new CEO leave literally a week after the appointment.

The sanctions impose practical restrictions on the activities of the company. For example, he cannot legally acquire many of the tools he uses to develop exploits, such as Windows laptops or iPhones, without explicit permission from the US government. The US said its default decision on NSO Group sales would 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 MIT Technology Review interviewees on condition of anonymity. At the highest level, there is real and serious doubt about the future of the NSO if it fails to drop off the US legal entity list.

Strategic issues

The NSO’s ties with the Israeli leadership have also complicated the situation. Like many arms manufacturers, the NSO Group maintains a very close relationship with its government and has established itself as an important political and diplomatic tool for Israel over the past decade. When NSO Group began selling hacking tools to the government of the United Arab Emirates, for example, Benjamin Netanyahu, then Prime Minister of Israel, pushed for the deal, according to people familiar with the deal.

In fact, Israel’s strategic plan to develop closer relations with its neighbors – neighbors that historically did not legally recognize Israel’s existence – was backed by NSO’s hacking technology, which was highly sought after by countries across the region. Pegasus has been used as a sweetener to strengthen Israel’s ties with countries including the United Arab Emirates, Morocco, and Bahrain.

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