Over 100 days into Donald Trump’s second term, Israeli spyware companies blacklisted under the Biden administration remain mired in restrictions—despite intensive efforts by Israeli officials and cyber industry leaders to overturn U.S. sanctions. According to Haaretz, figures connected to Israel’s tech and defense sectors lobbied senior Trump allies, including Jared Kushner and members of the former Abraham Accords team, to lift sanctions and restore travel visas to Israelis tied to the offensive cyber field. However, no concrete progress has been made.
The ongoing impasse is particularly acute for NSO Group, Israel’s most prominent surveillance tech firm, which recently lost a high-profile court battle to Meta. A California judge ordered NSO to pay $168 million in damages over its Pegasus spyware, which exploited WhatsApp vulnerabilities to access the phones of journalists, activists, and government critics. NSO’s legal team was also compelled to acknowledge in court that Saudi Arabia, among others, had been a client—an admission that raises further ethical and diplomatic concerns.
The case has further tarnished the reputation of NSO, long criticized by human rights organizations for enabling authoritarian surveillance. Despite the company’s insistence that it operates under the strict oversight of Israel’s Defense Ministry and sells only to vetted state clients, Meta and other tech giants like Apple have continued to pursue aggressive legal action against spyware manufacturers.
Haaretz reports that Shalev Hulio, NSO’s co-founder (now affiliated with Dream Security), met with Trump-linked officials in December alongside former Austrian Chancellor Sebastian Kurz. The meeting, which focused on artificial intelligence, cyber defense, and geopolitical strategy, underscores Israel’s broader ambitions to re-anchor its cyber diplomacy in the U.S.–Israel alliance under Trump.
However, those ambitions have yet to materialize. NSO, Candiru, and other sanctioned firms remain excluded from U.S. markets and federal contracts. Even lobbying efforts involving figures like Marc Zell, a U.S.-Israeli attorney and Republican operative, have failed to shift the administration’s stance. Zell told Haaretz he does not represent any Israeli spyware firms.
Adding to the sector’s woes, NSO disclosed during court proceedings that it has been operating at a loss—$9 million in 2023 and $12 million in 2024—with monthly costs around $10 million. CEO Yaron Shohat admitted the company is struggling financially and may be unable to pay the court-ordered damages.
While the Trump administration has signaled a warmer posture toward defense-tech cooperation—with companies like Palantir expanding operations in Israel—offensive cyber firms remain a legal and reputational liability. The Biden-era blacklisting of NSO, Candiru, and Intellexa was rooted in concerns over human rights violations, and Trump’s team appears reluctant to reverse course in the face of mounting public and legal scrutiny.
In the meantime, firms not subject to U.S. sanctions—such as Paragon, recently acquired by U.S.-based RED Lattice—are gaining market share and attracting American investment, deepening frustration within Israel’s embattled spyware sector. Industry insiders had hoped that a political shift in Washington would restore Israel’s former dominance in offensive cyber technologies. Instead, as Haaretz details, they are confronting a harsher reality: reputational damage, legal defeats, and a U.S. administration that has so far shown no interest in rewriting the rules.
