What's going on?
According to reports on Monday, Verint Systems, an American software company, is in talks to buy NSO Group, an Israeli firm that sells military-grade cyber surveillance technology, for around $1 billion.
What does this mean?
Verint sells a number of security-related products and has come into headlines recently for its award-winning facial detection software that it sells to governments. NSO’s business is much smaller than Verint’s but is considerably more controversial, especially as multiple state security agencies are known to have used its software to monitor “persons of interest” and hack their smartphones.
Verint may hope it’ll be able to market NSO’s technology to its 10,000 cybersecurity customers. NSO was actually in talks to be partially acquired by American investment firm Blackstone, but discussions ended last August.
Why should I care?
For markets: Being acquired is old hat for NSO.
An American tech investment group acquired 70% of NSO in 2014 for $110 million. Verint is reportedly set to pay around $1 billion for its majority stake (nearly a 10x return for those investors), but it wants to pay using its own stock rather than cash. NSO’s current owners would be effectively swapping their investment in NSO for a more valuable investment in Verint.
The bigger picture: Big Brother is watching you… and somebody’s funding it.
It’s well known that the police and intelligence agencies use the tech of firms like NSO and Palantir. Some bigger tech companies have a growing interest in the business of state surveillance, too: Amazon is apparently marketing its own facial recognition service to law enforcement agencies. On the other side of the world, Alibaba has invested $600 million in an artificial intelligence startup that makes surveillance systems used across China.