The U.S. Defense contractor L3 Harris has abandoned talks about acquiring Israeli tech company NSO Group’s surveillance technology after the White House said that any deal that came out of the talks raised serious concerns.
The White House opposed the deal due to security grounds. The opposition was seen as a fatal obstacle to proceeding with the purchase.
The White House said the deal raised “serious counterintelligence and security concerns for the U.S. government.” It became an insurmountable obstacle to a transaction.
Now, the potential acquisition is “certainly” off the table, according to people close to the matter.
The news comes after a tumultuous period for the Israeli surveillance company. NSO Group was placed on a U.S. blacklist last year by President Joe Biden’s administration. That happened after the commerce department’s bureau of industry and security determined the firm had acted “contrary to the foreign policy and national security interests of the U.S.”
L3 Harris had vetted any potential deal for NSO’s technology with its customers in the U.S. government and had received some signs of support from the intelligence community within the United States.
But government officials are questioning that characterization, saying that they are unaware of any indications of support for the deal. U.S. officials said that the intelligence community had raised concerns, and was not supportive of a deal.
L3 Harris was reportedly caught off guard after a senior official from the White House expressed strong reservations about any deal after news of the talks first came out last month. At that time, officials suggested a deal could be seen as an effort by a foreign government to dodge export control measures.
They also said that any transaction with a blacklisted company involving a U.S. company would “spur intensive review,” and they would need to examine whether the transaction posed any kind of counterintelligence threat to the government and its systems and information.
Once the pushback realities were clear to L3 Harris, the company decided it could not move forward with the matter.
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