Israeli spyware maker Paragon has been acquired by American private equity giant AE Industrial Partners in a deal worth up to $900 million, according to reports by Israeli news outlets Calcalist and Globes. The acquisition marks a significant investment in the cybersecurity industry, but also raises concerns over government surveillance and data privacy.

Paragon, founded by a group of former Israeli intelligence officers, has largely kept a low profile since its existence was first revealed by Forbes in 2021. The company's spyware product, called Graphite, has been likened to Pegasus, made by NSO Group, and other similar spyware products. Graphite offers services to hack phones, allowing access to apps on a target's phone, such as WhatsApp, Signal, Facebook Messenger, and Gmail.

The deal, reportedly worth $500 million upfront with the potential to reach $900 million depending on the company's growth, has sparked concerns over the use of spyware by governments and law enforcement agencies. In October, it was reported that U.S. Immigration and Customs Enforcement had signed a one-year contract worth $2 million with Paragon to acquire a "fully configured proprietary solution," which included licenses, hardware, and warranties, maintenance, and training.

The acquisition also raises questions about the involvement of Western investment firms in the Israeli spyware industry. In 2014, U.S. private equity firm Francisco Partners paid $130 million to acquire 70% of NSO Group's shares, and was also in contact with the now-defunct Italian spyware firm Hacking Team. The trend of Western firms investing in Israeli spyware makers has sparked concerns over the potential misuse of surveillance technology.

AE Industrial Partners did not respond to requests for comment on the reported deal. Paragon's co-founders, including CEO Idan Nurick, CTO Igor Bogudlov, and vice president of research Liad Avraham, also did not respond to requests for comment. Battery Ventures spokesperson Rebecca Buckman declined to comment, while Red Dot did not respond to a message requesting comment.

The acquisition of Paragon by AE Industrial Partners is likely to have significant implications for the cybersecurity industry and beyond. As the use of spyware by governments and law enforcement agencies continues to raise concerns over data privacy and surveillance, the deal highlights the need for greater transparency and accountability in the industry.

In recent years, there have been several high-profile cases of spyware being used to target individuals, including U.S. Embassy employees. The U.S. Department of Commerce has taken steps to address these concerns, including putting NSO Group on an economic blocklist in 2021, effectively banning U.S. companies from trading with the company. The acquisition of Paragon by AE Industrial Partners is likely to be closely watched by regulators and industry experts alike.

As the cybersecurity industry continues to evolve, the acquisition of Paragon by AE Industrial Partners serves as a reminder of the need for greater transparency and accountability in the use of surveillance technology. With the potential for significant growth and investment in the industry, it is crucial that regulators and industry experts work together to ensure that these technologies are used responsibly and in line with international human rights standards.