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US defense contractor said in talks to take over controversial NSO surveillance tech

Sale to L3Harris would need US, Israeli approval; report says deal would drastically cut Pegasus spyware client list; expert fears US police will use tech, threatening freedoms

An Illustration of a man holding his phone with an NSO Group logo with a computer screen in the background, in Jerusalem, on February 7, 2022. (Yonatan Sindel/Flash90)
An Illustration of a man holding his phone with an NSO Group logo with a computer screen in the background, in Jerusalem, on February 7, 2022. (Yonatan Sindel/Flash90)

A US defense company is reportedly in talks to purchase the technology developed by Israeli spyware firm NSO Group, giving it control over controversial surveillance tool Pegasus.

According to a joint report published Wednesday by The Guardian, Washington Post and Haaretz, discussions are being held with L3Harris on a potential sale of NSO’s technology, in a deal that could also include the transfer of some personnel from the Israeli firm to the American contractor.

The potential deal would be complicated by the fact that NSO Group has been blacklisted by the US in the wake of reports its technology was used in human rights violations.

Any agreement between NSO Group and L3Harris would require the permission of both the Israeli and US governments.

The outlets said the discussions on a sale were confirmed by multiple sources. The talks were initially reported by the Intelligence Online website.

NSO’s flagship spyware, Pegasus, is considered one of the most powerful cyber-surveillance tools available on the market, giving operators the ability to effectively take full control of a target’s phone, download all data from the device and activate its camera or microphone without the user knowing.

The Israeli firm has faced a torrent of international criticism but insists its product is meant only to assist countries in fighting crime and terrorism.

A logo adorns a wall on a branch of the Israeli tech company NSO Group, near the southern Israeli town of Sapir, on August 24, 2021. (AP Photo/Sebastian Scheiner)

An individual familiar with the talks told the outlets that if a deal were to be inked, the list of approved clients for the technology would be dramatically curtailed and would probably only include the so-called “five eyes” alliance — the US, the UK, Australia, New Zealand and Canada.

Some unnamed NATO allies would also have access to the technology, the reports said.

A potential sticking point appeared to be whether Israel would be allowed to use the technology, and whether it would be based in Israel or the US, the reports said.

However, it was believed that Israel would want to maintain oversight and would therefore want the deal to include a provision that all personnel and development would remain in Israel.

Israel’s Defense Ministry would play a role in any potential deal. Under a 2007 Israeli law, companies looking to sell cybersecurity-related products must receive export licenses from the Defense Ministry’s Defense Export Controls Agency, which is required to include “considerations regarding the end user or the end use,” though it does not expressly forbid arms sales to human rights violators. Israeli governments — both left- and right-wing — have long faced criticism for providing weaponry to human rights violators.

An unnamed senior White House official seemed to suggest that any potential agreement between NSO and L3Harris would raise concerns.

“Such a transaction, if it were to take place, raises serious counterintelligence and security concerns for the US government,” the official said.

The White House said that it had not been involved in “any way in this reported potential transaction.”

Illustrative — A Senior Associate Electrical Engineer at L3Harris (Business Wire via AP)

The senior White House official also said the US government “opposes efforts by foreign companies to circumvent US export control measures or sanctions, including placement on the US Department of Commerce’s Entity List for malicious cyber activity.”

The US Department of Commerce added NSO Group to its Entity List last November, blocking it from acquiring US technology. The move came after bombshell investigative reporting revealed that Hungary, India, Mexico, Morocco and Saudi Arabia had been among the firm’s clients, using its software for dubious purposes.

The White House official added that an agreement would “not automatically remove a designated entity from the Entity List, and would spur intensive review to examine whether the transaction poses a counterintelligence threat to the US Government and its systems and information, whether other US equities with the defense contractor may be at risk, to what extent a foreign entity or government retains a degree of access or control, and the broader human rights implications.”

The individual familiar with the talks said it was unknown what the potential price tag for the technology would be, and noted that it was probable that a new entity would need to be formed for the deal to go through because of NSO Group’s blacklisted status.

Last week it was reported that Israel was pushing the Biden administration to remove the firm from the blacklist. The Axios news site said that while the Israeli government initially rebuffed NSO’s request that it lobby the Biden administration on its behalf, it has since been convinced to assist the firm. The report cited three unnamed US and Israeli officials.

The US has justified its decision to list the firm, saying NSO Group supplies “spyware to foreign governments that used these tools to maliciously target government officials, journalists, business people, activists, academics, and embassy workers.”

Azerbaijan, Bahrain, Kazakhstan, Mexico, Morocco, Rwanda, Saudi Arabia, Hungary, India and the United Arab Emirates were all said to have purchased the NSO Group’s Pegasus program to target activists, political opponents and journalists, allegedly including Morocco targeting French President Emmanuel Macron. It was also reportedly used to track journalist Jamal Khashoggi, who was subsequently murdered by Saudi intelligence agents. NSO has denied allegations of wrongdoing.

Saudi Arabian journalist Jamal Khashoggi at the World Economic Forum in Davos, Switzerland, January 29, 2011. (AP /Virginia Mayo, File)

One expert, whose department has been involved in much of the work to uncover use of Pegasus, told the Guardian that if the sale were to go through, he believed it was unlikely that US national security agencies, or indeed those of Washington’s allies, would trust NSO’s technology.

Therefore, he said, it would instead perhaps be sold to local authorities, where it could pose a threat to civil rights.

“Where would the big market be? I fear the logical consumers would be US police departments. This would be an unprecedented threat to our civil liberties,” said John Scott-Railton, a senior researcher at Citizen Lab at the Munk School at the University of Toronto.

According to a recent report, the FBI considered using Pegasus, the infamous phone-hacking software, to collect phone data for ongoing investigations, but eventually decided against it.

Scott-Railton also said that any potential deal could also undermine the claim by the Biden administration that it was committed to holding “bad actors” accountable for their actions.

“All eyes are on NSO right now. If the White House doesn’t stop this deal, many will conclude that the administration is weak on enforcement, or that they’re cynical and helped a US company pick up NSO at fire-sale prices because it was sanctioned,” he said.

Both NSO Group and Israel’s Defense Ministry declined to comment on the reported discussions for a sale.

A spokesperson for L3Harris said: “We are aware of the capability and we are constantly evaluating our customers’ national security needs. At this point, anything beyond that is speculation.”

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