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Illustration: Trent Joaquin/Axios

Israeli cybersecurity company NSO Group has become a pernicious version of Steve Urkel, never acknowledging the calamity that its software seems to cause. Unlike the old TGIF character, however, NSO's consequences are very real and enabled by private equity.

Driving the news: An international journalistic consortium, in partnership with Amnesty International, this week reported that a piece of NSO software, called Pegasus, was used by used by governments to spy on journalists, lawyers, human rights activists and world leaders.

  • Pegasus is officially designed to track terrorists and criminals, but the reporting suggests it was surreptitiously installed on at least 50,000 phones (including the family of slain journalist Jamal Khashoggi).
  • NSO's clients reportedly include the countries of Hungary, India and Saudi Arabia (which allegedly ordered Khashoggi's assassination).
  • Israel's government already is forming a special team to manage the fallout, fearing it could evolve from a media crisis into a diplomatic crisis, per Axios' Barak Ravid.

What NSO is saying: It’s called the report "false" and threatened to sue for defamation.

  • But it can’t be surprised, given that this is hardly the first time there have been published stories about how its software has been used for nefarious purposes. For example, remember this story about the Saudis and Jeff Bezos. Or this one about Mexican journalists and their families.

Return on investment: Private equity firm Francisco Partners bought NSO in 2014. At one point, both Francisco and NSO had future Trump national security adviser Michael Flynn on their payrolls.

  • In 2017, Francisco held talks to sell a 40% stake to The Blackstone Group for around $400 million. But Blackstone got cold feet during advanced due diligence; formally bailing a couple of months after the first Mexico spying story was published.
  • Francisco, whose limited partner roster is littered with U.S. public pensions, steadfastly refused to comment on NSO. To this day, it has not explained what it did or didn't know.
  • The firm finally exited NSO in early 2019, selling it back to the company's founders and London-based private equity firm Novalpina, which pledged "a new model for public transparency."
  • Since then, NSO has become the pulsing heart of a dispute between the partners of Novalpina. And, in an ironic twist, it involves leaked WhatsApp messages and a lawsuit against one of the newspapers that later became part of the Pegasus consortium.

The bottom line: NSO isn't some rogue company being operated out of the basements of shadowy founders. Instead, it's been empowered by institutional investors that appear to have turned a blind eye to its deeds in the pursuit of profit.

Update: Francisco Partners provided the following statement:

"Promptly following our investment in NSO Group, we worked with the company to implement a Business Ethics Committee comprised of independent experts to review all sales.  As a result, during our ownership, the company rejected tens of millions of dollars in potential sales and terminated customers who misused its product.
During our ownership, the technology sold by NSO Group saved tens of thousands of lives, returned kidnap victims to their loved ones and assisted government agencies in apprehending the world’s most notorious criminals."

Go deeper

Updated 1 hour ago - World

State Department orders evacuation of U.S. diplomats' families from Ukraine

From left, Under Secretary for Political Affairs Victoria Nuland, Secretary of State Antony Blinken and U.S. Chargés d'Affaires in Ukraine Kristina Kvien during a meeting with Prime Minister of Ukraine Denys Shmyhal in Kyiv. Photo: Yevhen Liubimov/ Ukrinform/Barcroft Media via Getty Images

The State Department will begin evacuating families and non-essential staff from the U.S. Embassy in Kyiv this week, according to a travel advisory published Sunday evening.

Why it matters: The move underscores U.S. fears that a Russian invasion could destabilize Ukraine and threaten embassy's ability to assist Americans.

Perfect storm brewing for extreme politicians

Data: Axios research; Table: Jacque Schrag/Axios

Redistricting and a flood of departing incumbents are paving the way for more extreme candidates in this year's midterm elections.

Driving the news: At least 19 House districts in 12 states are primed to attract such candidates — hard partisans running in strongly partisan districts — according to an Axios analysis of districts as measured by the Cook Political Report's Partisan Voter Index (PVI).

Updated 2 hours ago - Politics & Policy

Omicron dashboard

Illustration: Aïda Amer/Axios

  1. Health: Fauci: "Confident" Omicron cases will peak in February — FDA OKs antiviral drug remdesivir for non-hospitalized COVID patients — Walensky: CDC language "pivoting" on "fully vaccinated".
  2. Vaccines: Annual COVID vaccine preferable to boosters, says Pfizer CEO — Team USA 100% vaccinated against COVID ahead of Beijing Olympics.
  3. Politics: Arizona governor sues Biden administration over COVID funds tied to mandates — Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" on anti-mask school policies.
  4. World: Beijing Olympic Committee lowers COVID testing threshold ahead of Games — Beijing officials urge COVID-19 "emergency mode" before Winter Olympics — Austria approves COVID vaccine mandate for adults.
  5. Variant tracker

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