NSO Group Technologies Limited (NSO standing for Niv, Shalev, and Omri, the names of the company's founders) is an Israeli cyber-intelligence firm primarily known for its proprietary spyware Pegasus, which is capable of remote zero-click surveillance of smartphones. it employed almost 500 people.
NSO claims that it provides authorized governments with technology that helps them combat terror and crime. The company says that it deals with government clients only. Pegasus spyware is classified as a weapon by Israel and any export of the technology must be approved by the government.
According to several reports, NSO Group spyware has been used to target human rights activists and journalists in various countries, was used for state espionage against Pakistan, for warrantless domestic surveillance of Israeli citizens by Israeli police, and played a role in the murder of Saudi dissident Jamal Khashoggi by agents of the Saudi government.
In 2019, instant messaging company WhatsApp and its parent company Meta Platforms (then known as Facebook) sued NSO under the United States Computer Fraud and Abuse Act. In 2021, Apple filed a lawsuit against NSO in the US, and the US included NSO Group in its Entity List for acting against US national security and foreign policy interests, effectively banning US companies from supplying NSO.
Corporate profile
Overview NSO Group is part of the cyber-arms industry. It is a subsidiary of the Q Cyber Technologies group of companies. Q Cyber Technologies is the name the NSO Group uses in Israel, but the company goes by OSY Technologies in Luxembourg, and in North America, a subsidiary formerly known as Westbridge. It has operated through various other companies around the world.
Founding NSO Group was founded in 2010 by Niv Karmi, Shalev Hulio, and Omri Lavie. Hulio and Lavie were school friends who went into the technology start-up sector during the mid-2000s. The pair founded a company - CommuniTake - which offered a tool that let cellphone tech support workers access the customers' devices (but necessitating that the customer grant permission to enable access). After a European intelligence agency expressed interest in the product, the pair realised they could instead develop a tool that could gain access to phones without user authorisation, and market it to security and intelligence agencies. Karmi, who served in military intelligence and the Mossad, was brought on board to help market the tool with the help of his contacts. The first iteration of NSO's Pegasus spyware was finalised in 2011.
Operations NSO Group has come to employ over 700 personnel globally. Almost all of NSO's research team is made up of former Israeli military intelligence personnel, most of them having served in Israel's Military Intelligence Directorate, and many of these in its Unit 8200. The company's most valuable staff are graduates of the military intelligence's highly selective advanced cyberweapons training programs. NSO seeks to uncover a surfeit of zero-day exploits in target devices to ensure smooth continuous access even as some of the security vulnerabilities exploited by NSO are inevitably discovered and patched, with labs in the company's Herzliya headquarters featuring racks stacked with phones being tested against new exploits.
Relationship with the Israeli state Pegasus spyware is classified as a military export by Israel and its sale is controlled by the government. According to The New York Times, "Israel's government has long seen Pegasus as a critical tool for its foreign policy." and that it "[...] has treated NSO as a de facto arm of the state, granting licenses for Pegasus to numerous countries [...] with which the Israeli government hoped to nurture stronger security and diplomatic ties." Israel has used the sale of NSO products as a diplomatic bargaining chip to advance its foreign policy interests as well as limiting its sale to or its use against certain states to maintain good relations with certain states. Also, at least one co-founder, Shalev Hulio, was reported to have traveled under an Israeli diplomatic passport. Israel has faced criticism for approving the sale of NSO technologies to countries with poor human rights records. U.S. intelligence officials have also said the Israeli state presumably has backdoor access to data obtained by Pegasus. NSO denies being "a tool of Israeli diplomacy", and denies the presence of a backdoor in its spyware tools.
Israel, wary of angering the U.S. in the wake of the Snowden revelations, required NSO to prevent Pegasus from targeting American phone numbers. Israel has used Pegasus to advance its interests in the region, with Pegasus playing a role in negotiating the Abraham Accords. A New York Times investigation highlighted several instances in which the sale of Pegasus to a particular government coincided with that government's increased support of Israel. Israel has used Pegasus sales in its diplomatic efforts to forge a united front against Iran, thus clearing the sale of the spyware to Azerbaijan, Morocco, the UAE, and Saudi Arabia.
The Israeli government blocked the sale of Pegasus to Estonia and Ukraine for fear that Israel's relations with Russia would be damaged if the spyware was used against Russia. Israel initially authorised the export of Pegasus to Estonia (which made a $30 million down payment to obtain the system), but after a senior Russian official approached Israeli security agencies and informed them that Russia had learned of Estonia's attempts to obtain Pegasus, the Israeli Ministry of Defense decided to disallow Estonia from using Pegasus against any Russian phone numbers following a heated debate on the issue among Israeli officials, and subsequently blocked the sale.
Corporate history The company's start-up funding came from a group of investors headed by Eddy Shalev, a partner in venture capital fund Genesis Partners which invested a total of $1.8 million for a 30% stake.
In 2013, NSO's annual revenues were around US$40 million.
In 2014, the U.S.-based private equity firm Francisco Partners bought the company for $130 million.
In 2014, the surveillance firm Circles (which produces a phone geolocation tool) was acquired by Francisco Partners for $130 million, and thus became a corporate affiliate of NSO's.
In 2015, Francisco was seeking to sell the company for up to $1 billion.
Annual revenues were around $150 million in 2015.
In June 2017, the company was put up for sale for more than $1 billion by Francisco Partners (roughly ten times what Francisco originally paid to acquire it in 2014). At the time it was put up for sale, NSO had almost 500 employees (up from around 50 in 2014).
On February 14, 2019, Francisco Partners sold a majority (60%) stake of NSO back to co-founders Shalev Hulio and Omri Lavie, who were supported in the purchase by European private equity fund Novalpina Capital which specialises in investments in controversial companies. Hulio and Lavie invested $100 million, with Novalpina acquiring the remaining portion of the majority stake, thus valuing the company at approximately $1 billion. The day after the acquisition, Novalpina attempted to address the concerns raised by Citizen Lab with a letter, stating their belief that NSO operates with sufficient integrity and caution.
In July 2021, investors in Novalpina Capital stripped Novalpina Capital of control over its assets (including NSO) after an unresolved personal dispute amongst the co-founders of Novalpina Capital. Berkeley Research Group (BRG), a California-based consultancy firm, was subsequently handed control over the assets (including NSO).
By the time of BRG's takeover, NSO Group was in perilous financial straits, having gone months without a new sale and in risk of missing its debt payments and its November 2021 payroll payments. NSO CEO Shalev Hulio suggested to BRG that the company should improve its financial standing by starting to sell its products to high-risk customers previously deemed unacceptable, responding to objections by joking that missing debt payments was risky too. BRG was categorically opposed to the suggestion despite acknowledging that selling to high-risk customers was the only realistic way of maintaining NSO's business operations. Hulio proposed increasing sales to Israel's western allies (including U.S. law enforcement, the most lucrative prospective market), but the November 2021 U.S. blacklisting of NSO subsequently ended the company's prospects of breaking into the U.S. market (Hulio then devised a plan to split up the company in order to circumvent the U.S. sanctions). According to the Financial Times, NSO also seemed to have been abandoned by the previously doting Israeli government due to a proliferation of Israeli companies offering comparable technologies (including some established by former NSO employees). In a court filing, BRG described NSO as "valueless" to its private equity backers; in December 2021, a group of NSO creditors described NSO as insolvent in a letter to NSO's majority shareholders.
Two of the ousted co-founders attempted to reclaim control over Novalpina Capital's assets by filing a lawsuit in Luxemburg, with a U.K. court allowing the case to proceed to trial in April 2022. In an April 2022 letter, BRG told an EU committee investigating abuse of NSO's products that NSO's management has not been forthcoming in providing information about its business operations, including on the issue of the company's blacklisting in the U.S.