Israeli cyber firm NSO discovers spyware unit sale, closure

The move follows the recent US decision to blacklist the company, alleging that NSO’s surveillance software, called Pegasus, has been used improperly. Those pressures put the company at risk of defaulting on its debt, according to ratings firm Moody’s Corp.

NSO is in talks with two US-based investment funds about a potential sale or refinancing plan, the person said. Among the options being discussed are NSO increasingly limiting the countries where it sells spyware or instead using technology and human talent at its Pegasus unit to build cyber-defense products. NSO has hired New York-based advisory firm Moelis & Company to lead the talks, the person said.

Bloomberg previously reported the discussions.

In addition to spyware, NSO says it sells products that provide data analysis, defense against drones, and search and rescue services.

For years critics and privacy advocates have alleged that NSO and similar companies sell tools that allow governments and other customers to target and break into the cellphones of politicians, human rights activists and journalists.

According to security researchers, NSO’s Pegasus software can be installed on mobile phones without the user’s knowledge or consent. Pegasus, they say, can turn a smartphone into a silent spying device by gaining access to its files, messages, microphone and camera.

NSO has said that its products are used by government-intelligence and law-enforcement agencies to fight terrorism and crime. The company has also said that it has terminated contracts with governments that have misused its software and has taken steps to prevent abuse.

Earlier this month, the Biden administration placed NSO on an export sanctions list, saying the company was “acting contrary to the foreign policy and national security interests of the United States.” The US move would restrict NSO from acquiring certain US technology and may make it harder for the company to enter into contracts with international customers.

A person familiar with the matter said US-based funds in talks with NSO had approached the company to discuss a possible deal.

NSO has also faced scrutiny from businesses. Apple Inc. said it sued NSO last month, alleging the company had misused its products and services. The Israeli company is also fighting a 2019 lawsuit from the WhatsApp messaging service owned by Meta Platform Inc., formerly known as Facebook Inc.

In response to the lawsuits, NSO has said that its spyware has saved lives by allowing law enforcement to gain access to the encrypted communications of criminals and terrorists.

Last week Israel’s defense ministry, which must approve NSO and all other Israeli sales of cyber weapons, revised its export policy, requiring customers to certify that they only use technology to prevent terrorism and crime. will use. The move follows recent talks between Israel and other countries whose representatives were reportedly targeted by spyware.

Cyber ​​experts said it is unclear how changes to Israel’s export policy will prevent abuse of Pegasus, as NSO has always maintained that its customers are not aware of entities targeted with its spyware tools.