The NSO is about to sell the hacking tools in France. Now the Israeli spyware company is in crisis.

For the most part, The NSO defended itself by saying that it only builds tools and does not control what foreign governments choose to do with Pegasus, and it continues to run its business normally.

The sequence of revelations in 2021, however, has hit it differently.

The “NSO Affair,” as this year’s onslaught of scandals is called in Israel, has cost the company millions of dollars in lost sales. Reports earlier this year were widespread Child Abuse made headlines around the world, but the company says the allegations are based on mischaracterizing a standard database of phone numbers as NSO Group’s spying targets.

U.S. sanctions have had an immediate and greater impact on the company than previous scandals. Bloomberg reported that Wall Street avoids the NSO and treats it as a distressed asset; it is already full $ 500 million debt and increased risk of insolvency; meanwhile, the newly appointed CEO of the company quit just a week after being appointed.

Penalties create practical restrictions on how the company operates. For example, it is not legal to purchase many of the tools it uses to develop exploits, such as laptops with the Windows operating system or iPhones, without explicit permission from the United States government. The US says their default decision to sell NSO Group would be negative.

The U.S. decision has a deeper impact on the company, too. Morale is low and employees are collapsed and confused, according to many who spoke to the MIT Technology Review on condition of anonymity. There is real and serious skepticism at the highest level about the future of the NSO if it is not removed from the US entity list.

Strategic problems

The NSO’s links to 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 an important political and diplomatic tool for Israel over the past decade. When the NSO Group started selling hacking tools to the United Arab Emirates government, for example, Benjamin Netanyahu, then the prime minister of Israel, specifically urged the deal, according to people with knowledge to sell.

In fact, Israel’s strategic plan to develop closer ties with its neighbors — neighbors who have historically been unaware of Israel’s existence — was inspired by the NSO’s hacking technology, much sought after by the countries around the region. Pegasus was used as a deal sweetener to strengthen Israel’s relations with countries including the United Arab Emirates, Morocco, and Bahrain.

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