For the most part, NSO has defended itself by saying that it only builds tools and does not control what foreign governments do with Pegasus, and it has continued to do business as usual.
However, the sequence of revelations in 2021 hit it differently.
The “NSO affair”, as this year’s scandals in Israel are called, cost the company millions in lost sales. Reports of widespread abuse earlier this year made headlines around the world, but the company says the allegations are based on a standard database of phone numbers being mistakenly identified as NSO Group’s espionage targets.
The US sanctions hit the company immediately and much more severely than previous scandals. Bloomberg reported that Wall Street is avoiding NSO and treating it as a distressed asset; it has over $ 500 million in debt and a growing risk of bankruptcy; meanwhile, the company’s newly appointed CEO resigned just a week after his appointment.
The sanctions create practical restrictions on the company’s operations. For example, it cannot legally acquire many of the tools it uses to develop exploits, such as laptops with a Windows operating system or iPhones, without the express permission of the United States government. The US has announced that its decision to sell to the NSO Group will be negative.
The U.S. decision also has a deeper impact on the company. Morale is low and staff are devastated and confused, according to several who spoke to the MIT Technology Review on condition of anonymity. There are real and serious doubts at the highest level about the future of NSO if it cannot be removed from the US list of companies.
The NSO’s links with the Israeli leadership have also complicated the situation. Like many arms manufacturers, the 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 the NSO Group started selling hacking tools, such as Benjamin Netanyahu, to the UAE government, the Israeli prime minister pushed for the deal, according to people who knew about the sale.
Indeed, Israel’s strategic plan to forge closer ties with its neighbors – neighbors who historically failed to legally recognize Israel’s existence – was sustained by NSO’s hacking technology, which was highly sought after by countries in the region. Pegasus was used as a sweetener to strengthen Israel’s ties with countries like the United Arab Emirates, Morocco, and Bahrain.