US defence firm ends talks to buy Israeli NSO spyware despite 'quiet backing' from intelligence: report

A US defence contractor has abandoned talks to buy Israeli company NSO Group and its notorious Pegasus spyware technology despite backing from US intelligence officials for the purchase, according to reports on Sunday.

American intelligence officials quietly supported defence firm L3 Harris' plans to acquire NSO, the New York Times reported, citing five people familiar with the negotiations – despite the Biden administration's blacklisting of the Israeli company a few months ago.

However, The Guardian reported that a US official appeared to question news of the intelligence officials' backing, saying: "We are unaware of any indications of support or involvement from anyone in a decision-making, policymaking or senior role."

The NSO Group, which is regulated by Israel's defence ministry, shot to global recognition last year when human rights organisations and investigative journalists exposed how governments, including some in the Middle East and North Africa, were using its surveillance technology to track activists, dissidents and political rivals, among others.

NSO's supply of spyware to governments to be used "maliciously" on targets saw it added to the US' Entity List in November – so any deal with a US contractor would have to be approved by Washington.

The Guardian, the Washington Post and Haaretz jointly reported last month that L3 Harris, which sells surveillance tools to the US government and clients including the FBI and NATO, was in talks to acquire the Pegasus spyware and absorb some NSO staff.

A White House official told the news outlets at the time that any purchase would "raise serious counterintelligence and security concerns for the US government."

L3 Harris informed the US government it was no longer pursuing the acquisition shortly after media reports about the administration's disapproval of the talks surfaced last month, a US official told NYT.

Once L3 Harris understood the level of "definitive pushback", a person familiar with the talks told The Guardian "there was a view [in L3 Harris] that there was no way L3 was moving forward with this".