Sources: defense contractor L3Harris scuttled plans to buy NSO Group despite alleged US intel officials' support, after the Biden admin's outrage over the talks
The American contractor L3 Harris is said to have cited support from intelligence officials for its effort to acquire NSO …
New York Times
Context & Ripple Effects
NSO Group has spent years shopping for a Western exit that never closes: Blackstone walked away from a stake in the Pegasus maker back in 2017 (Blackstone ended its talks), and this June L3Harris appeared to be the next suitor, with sources describing talks to acquire NSO's core tech (the June talks) even as the White House flagged serious security concerns.
The deal is now dead, and the reported reason is the sharpest part: L3Harris allegedly claimed US intelligence officials backed the acquisition, while the Biden administration — which had already put NSO on a Commerce Department blocklist (the November 2021 blocklist) — was outraged enough to kill it. That gap between parts of the intelligence community and the political leadership is the story.
First-order effects
NSO loses its most credible path out of financial distress, leaving the company — reportedly carrying ~$400M in debt — without an American buyer despite alleged support from inside the intelligence community.
L3Harris walks away from a surveillance-tech acquisition it had pitched internally as government-sanctioned, and any future defense-contractor interest in NSO now carries visible political risk after the administration's public outrage.
Second-order effects
With the sale collapsed, NSO cut ~15% of its workforce and raised prices ~20% (the post-collapse cuts), pushing costs onto the government customers who remain — the same buyers US law enforcement had earlier balked at on price (when agencies rebuffed its lobbyists).
Rival buyers take note of the pattern: France also abandoned a near-final Pegasus purchase after targeting claims surfaced (France's aborted purchase), so NSO's addressable market keeps shrinking to customers willing to absorb reputational exposure.
Third-order effects
If the pattern holds, commercial spyware firms face a structural squeeze: Western governments want these capabilities under controlled ownership but the political cost of acquiring them kills every exit, leaving distressed vendors selling to whoever remains rather than consolidating into sanctioned defense primes.
The split between intelligence officials who wanted NSO inside the tent and an administration enforcing the blocklist points toward recurring friction over whether spyware is a procurement question or a foreign-policy one — with policy outranking deals each time it has been tested here.
The trend: Commercial spyware is being squeezed between governments that want its capabilities and governments that won't let anyone buy it, leaving vendors like NSO shrinking instead of consolidating.
Much of the intelligence industry's consolidation is due in part to suggestions like this from the spymasters. But this is quite an unusual case, involving L3-Harris and Israel's NRO. “Firm Said US Spies Backed Its Bid for Pegasus Spyware Maker.” (Free). https://www.nytimes.com/.…
We need more “definitive pushback” against mercenary spyware firms, just like this below 👇 “White House opposition on security grounds seen as fatal obstacle to L3 Harris proceeding with purchase” of NSO Group @skirchy https://www.theguardian.com/ ...
A team of executives from an American military contractor quietly visited Israel numerous times in recent months to try to carry out a bold but risky purchase. They told the Israelis that U.S. intelligence supported the acquisition. W\@MarkMazzettiNYT https://www.nytimes.com/...
“But five people familiar with the negotiations said that the L3Harris team had brought with them a surprising message that...American intelligence officials, they said, quietly supported its plans to purchase NSO...” https://www.nytimes.com/...
“One of the conditions was that NSO's arsenal of ‘zero days’—vulnerabilities in computer source code that allow Pegasus to hack into mobile phones—could be sold to all of America's partners in the so-called Five Eyes intelligence sharing relationship.” https://www.nytimes.com/...
The American contractor L3 Harris is said to have cited support from intelligence officials for its effort to acquire NSO, the Israeli spyware company blacklisted by the Biden administration. https://www.nytimes.com/...
6/ #NSOGroup certainly knew a failed deal story was inbound. Of course, looks bad to their investors. To the the rest of the world...like a bit of a death spiral. Perhaps this explains some of their recent puzzling moves?
WHOA: Deal for 🇺🇸 defense contractor @L3HarrisTech to acquire #NSOGroup tanked. Counterintelligence problems reportedly played big role. Thoughts: Well, $LHX exit helps explain recent signs of desperation from the spyware company. 1/🧵 By @skirchy https://www.theguardian.com/ ... …
One of the conditions was that NSO's arsenal of “zero days” — the vulnerabilities in computer source code that allow Pegasus to hack into mobile phones — could be sold to all members of the Five Eyes: US, UK, Canada, Australia and New Zealand.