For the most part, NSO has defended itself by saying that it only builds tools and has no control over what foreign governments choose to do with Pegasus, and has continued to conduct business as usual.
However, the sequence of revelations in 2021 struck her differently.
The “NSO Affair,” as this year’s scandalous attack in Israel is called, has cost the company millions of dollars in lost sales. Reports earlier this year of the spread of abuse made headlines around the world, but the company says the allegations are based on mischaracterizing a record database of phone numbers as NSO Group’s spy targets.
The US sanctions had an immediate and far greater impact on the company than previous scandals. Bloomberg reports that Wall Street is abandoning the NSO and treating it as a distressed asset; Meanwhile, the company’s newly appointed CEO resigned just a week after his appointment.
Sanctions impose practical limitations on how the company operates. For example, it cannot legally purchase many of the tools it uses to develop vulnerabilities, such as Windows laptops or iPhones, without the express approval of the US government. The United States said its default decision on sales to the NSO Group would be negative.
The US decision has a deeper impact on the company as well. Morale is low and employees are frustrated and confused, according to several who spoke to the MIT Technology Review on the condition of anonymity. There is real and intense doubt at the highest levels about the future of the NSO if it cannot be removed from the US Entity List.
The NSO’s ties to the Israeli leadership have also complicated the situation. Like many arms manufacturers, the NSO Group enjoys a very close relationship with its government and has proven to be an important political and diplomatic tool for Israel over the past decade. When the NSO Group began selling hacking tools to the UAE government, for example, Benjamin Netanyahu, then Israel’s prime minister, specifically urged the deal, according to people familiar with the deal.
Indeed, Israel’s strategic plan to develop closer relations with its neighbors—neighbors who have historically not legally recognized Israel’s existence—was backed by the NSO’s hacking technology, which was highly coveted by countries across the region. Pegasus has been used as a local for deals to bolster Israel’s relations with countries including the United Arab Emirates, Morocco and Bahrain.