The American defense firm L3Harris has ended talks with blacklisted Israeli spyware company, NSO Group, to buy the firm’s hacking tools following intelligence and security concerns raised by the Biden administration, according to people familiar with the matter.
A few days after the reports were published, “L3 reached out to the U.S. government and said they would not be moving forward,” said the official, who, like others familiar with the matter, spoke on the condition of anonymity because of the matter’s sensitivity. The New York Times first reported that L3Harris notified the administration the talks were off.
The administration’s concerns were outlined in a White House statement last month that said L3Harris’s acquisition of the spyware would “pose a serious counterintelligence and security risk to U.S. personnel and systems,” and noted the spyware — named Pegasus — had “also been misused around the world to enable human rights abuses, including to target journalists, human rights activists, or others perceived as dissidents and critics.”
The breakdown of talks means the American defense contractor would no longer seek control of one of the world’s most sophisticated and controversial hacking tools. This story was jointly reported by The Washington Post, the Guardian and Haaretz.
The Biden administration last fall placed NSO Group on the Commerce Department’s Entity List, limiting its ability to use American technology. The move came after several U.S. agencies determined its spyware had been used by foreign governments to “maliciously target” government officials, activists, journalists, academics and embassy workers around the world.
The counterintelligence concerns arose from what U.S. officials say is NSO Group’s close relationship with the Israeli government. Israel’s Defense Ministry must sign off on all the firm’s contracts. Israel, while a close partner of the United States, is not among the circle of intelligence allies known as the Five Eyes, which includes Britain, Australia, Canada and New Zealand. One of the unresolved questions during NSO and L3Harris’s discussions has been whether the Israeli government would be able to use NSO’s surveillance technology.
The administration’s concerns, the U.S. official said, were “informed by an intelligence community analysis of the potential impacts” of L3Harris acquiring the Israeli spyware. U.S. spy agencies conducted the analysis after learning L3Harris was interested in such a deal.
A second person familiar with the talks said that “the moment there was … definitive pushback” from the U.S. government, “there was a view [within L3Harris leadership] that there was no way the company was moving forward with this.” In other words, the person said, “If the [U.S.] government is not aligned, there is no way for L3 to be aligned.”
NSO did not respond to a request for comment.
The New York Times on Sunday, citing five people familiar with the discussions, reported that L3Harris’s representatives told the Israeli officials that U.S. intelligence agencies supported the acquisition as long as certain conditions were met. The conditions included allowing NSO’s cache of “zero days” — software vulnerabilities that allow Pegasus to hack cellphones — as well as Pegasus source code to be sold to Britain, Canada, Australia and New Zealand, the Times reported.
“We are unaware of any indications of support or involvement from anyone in a decision-making, policymaking or senior role,” said the U.S. official. “The U.S. Government was not involved in and did not support or attempt to facilitate any reported potential transaction involving a foreign commercial surveillance software company on the Department of Commerce’s Entity List. In fact, the intelligence community expressed concerns after learning about the possibility of the sale, which informed the administration’s concerns.”