What will NSO do without its flagship product?
A month ago, the US Department of Commerce added Israeli cyberattack technology company NSO to its list of companies operating against US national security and foreign policy interests. If at the time they were thinking of NSO they would be able to talk to a few politicians and US officials to get the company off the list and go back to business as usual, now over time and it stays. in the headlines internationally, the chances of this happening seem to be fading.
Even at the time, “Globes” reported that the company was planning to sell its Pegasus division, the division responsible for spyware that had been used to hack the phones of politicians, journalists, activists and others, and change its spots to become a cybersecurity company that assists governments in securing facilities and infrastructure. Now it looks like the company needs even more serious surgery. Its main problem is branding. In fact, its brand name has become so toxic that potential buyers seek to avoid buying it whole simply for fear of damaging their own brands.
Internally, life at NSO continues as normal. Two weeks ago, his employees took a group vacation to Eilat, and they are eagerly awaiting the sale of the company as an exit opportunity, or at least as a valve to relieve the pressure that has built up over the years. last years. months following various media reports. But according to Bloomberg, NSO has already retained the services of Moelis & Co., a small investment bank, which agreed to work with it to find a buyer. The plan is that Pegasus will be shut down and that $ 200 million will be pumped into the business to transform it from a company developing cyber attack tools into a cyber defense player.
NSO not the first
It won’t be for the first time in history. American cyber-company Endgame was founded by former CIA operatives, raised funds from prestigious venture capitalists like Bessemer and Kleiner Perkins, but was quickly caught offering information for sale. on cyber vulnerabilities of other entities. The company had to switch to a model in which it protected the cyber weaknesses of financial companies, and it was finally sold two years ago for $ 234 million.
French company Amesys also underwent a metamorphosis after its executives were accused of human rights abuses following the sale of systems to Libya and Egypt. They reformed it as Nexa Technologies, although this company mainly deals with the integration of cyberattack solutions and not so much with the development of its own technology.
NSO considers sale and closure of Pegasus division
Italian cyber-company Hacking Team, which sold cyber-hacking tools to various countries, went through a similar process. The company closed, changed ownership, and put aside the hacking tools it had developed. It then reopened under the name Memento Labs and is now developing new systems based on the expertise of its founders. Hacking Team has submitted to new ethical rules, has set up an ethics committee with representatives of academic institutions and works in close collaboration with European regulators.
NSO owns several toxic assets, such as its brand, and legal actions are pending against it in US courts, such as the lawsuits filed by Facebook and Apple. On the other hand, it has several strengths that could make it a successful cyber business: a team that understands all possible security holes and the way Russian and Chinese hackers think; leadership with links to governments and security agencies; and hundreds of millions of dollars in cash.
The US administration tightens controls but leaves the opening
Although the US administration has blacklisted the company, it does not rule out the use of Trojans to monitor and locate citizens. There are many companies in the United States – some private, some semi-governmental – that operate cyber attack tools no less effective than NSO’s. US-based Accuvant was recently revealed as the company behind the iPhone hack in the UAE.
Last Friday, the Biden administration announced tighter controls on exports of cyberattack technology, but it does not intend to fight to the death against the cyberattack companies, certainly not the Israeli ones that work with the administration, serving as outside contractors for jobs Americans don’t want to do. It only seeks to limit sales to non-democratic countries. The administration has marked more than 100 countries as members of the âDemocracy Summitâ forum, which will work jointly to promote democratic values ââand fight against the autocratic winds blowing from various corners of the world.
President Biden has no problem with the fact that the Israeli cyberattack firm Paragon, among the investors in which the American venture capital firm Battery Ventures is located, will continue to work with countries in Europe. He will also have no problem with NSO working with the US administration in its new form, with a different name and face. It was only recently that the Israeli company signed a huge contract with the German government, worth tens of millions of dollars.
After the closure of Pegasus, NSO may assign the lawsuits to another company and transfer all the capital necessary to meet them. It will be able to keep its workers and technologies connected to non-Pegasus products, such as its drone management system, in a separate company under a new brand. A few months later, she could hire a renowned CEO, the type that Itzik Benbenisti would have filled had he not left two weeks after his appointment. In a new defensive cybersecurity business configuration, NSO will be able to offer its protection products for government or public infrastructure, thanks to its army of consultants, hackers and drones.
Who will buy NSO? In the past, the names of major US cyber companies such as Palantir were in the air, but the chances of that happening are now low. It could be a financial fund that injects capital solely for the purpose of rebranding and changing strategic direction. Product companies like Samsung, which employs hundreds of hackers to break into its products and spot vulnerabilities, are other potential buyers.
Management and employees, however, will have to adapt to the consequences of strategic change and the new reality. The value of contracts will decrease dramatically and wages will decrease with them. Competition will be tougher and NSO’s ability to shine as a company with higher wages and better terms than anyone else will not last forever.
Posted by Globes, Israel business news – en.globes.co.il – December 15, 2021.
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