US Department of Commerce: NSO was blacklisted acting against the national interest of the US

On Wednesday afternoon, the US Department of Commerce dropped a bombshell: it announced that two Israeli companies, NSO and Kandiro, were blacklisted as entities acting against the national interest of the United States, in light of repression aided by the company in authoritarian countries and against democracies. "Foreign governments have served as a means of repression and silence in authoritarian regimes and as a tool against regime opponents, journalists and exiled activists."
The decision means that companies will have to issue a special license to trade in the US, but it will also be difficult for them to use any American service, from account management software to cloud services. There is no certainty that they will succeed in the task of issuing such a license.
What does it mean? We will focus on NSO because it is the largest of the companies. First, there is unequivocal confirmation here of the Pegasus Project, a series of investigations that have uncovered the use of NSO's offensive cyber tools around the world for illegitimate purposes, such as monitoring journalists and human rights activists. NSO denied and again denied the findings in the investigation, but gradually Western intelligence agencies were added that confirmed the findings (French and Belgian). The decision of the US Department of Commerce is weighty and comes after an investigation and collection of evidence by the US administration. From now on, the NSO will no longer be able to claim that "no evidence was presented" of its actions. Now the burden of proof is on it.
It is possible that the new restrictions will roll like a snowball that will lead to the end of the NSO, at least as we know it now. Explain: Even before the decision was published, NSO was a company in crisis. The company's ownership fell apart due to a dispute in the private investment fund it held, and the company sought new ownership as well as raising capital (e.g. through an IPO).
Now these two moves look demonic. Which investment fund would you like to touch on this infected asset? What's more, American bodies are quite blocked from doing so now. Which stock exchange will receive the NSO and which institutional body will put its savers' money in it? Even access to bank credit is becoming challenging. "Once the U.S. defines a particular company as invalid, US authorities and companies, including banks, must not be in touch with it. This means that foreign companies and countries that want to maintain business or political ties with US officials must comply with sanctions, "explained Attorney Itai Mac.
The company's financial situation was not good. It was given an "insolvency" warning in Moody's credit rating report. But that was even before Pegasus' investigations and before the Department of Commerce's decision. , Dubai's account was cut off due to illegal tracking of the former ruler of Dubai's wife (while she was in London).
In the West, however, some governments (led by France) have protested the use of Pegasus software against the country's citizens, which has led the company to limit its tracking capabilities against numbers in all "five-eyed" countries (intelligence alliance of New Zealand, USA, UK , Australia and Canada.) As far as NSO revenues in the US were (and were), they will stop almost immediately.
So on the one hand the company is under financial pressure, and on the other hand it is losing accounts and castrating the capabilities of the software. How long can this condition last?
And there is another aspect, the workers. High-tech workers are a scarce resource and NSO relies on exceptional talents in the cyber field - people who can find weaknesses in Android and iOS. But will NSO employees feel comfortable working for the company now that the leader of the Democratic world has taken her training certificate? And who wants trouble at the border crossing to the US? There will almost certainly be some abandonment of some of the company's employees, and they will have no problem finding another job out there, one that does not come with ethical dilemmas. But recruiting new employees will be difficult to impossible. Which at the same time NSO continues to conduct a media lawsuit against Facebook.
What can the company do? Some options: It can gradually turn to non-offensive products like the skimmer activity it has and the analytics systems. It also recently announced its intention to develop defensive cyber products as well. It is not simple, and takes time, but possible.
A second option is to try to be sold in a deal that will re-grant it a kosher certificate. For example trying to sell to a company like Rafael, Elbit or IAI (previously Verint wanted to acquire NSO). A third, somewhat imaginary option is to look for a non-Western investor, a Russian oligarch or an oil prince from the Gulf, but such a deal would have difficulty obtaining regulatory approvals from Israeli sources, so it is not really reasonable. And just to conclude, we will mention that all this is now falling on a new CEO of the company, Itzik Benvenisti, who took office this week. We wish him success.