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The night it happened, right after midnight on August 10, Bill Marczak
and his girlfriend were staying up late to watch Star Trek reruns in
their spare one-bedroom apartment, in El Cerrito, California, just north
of the University of California at Berkeley campus.

A trim Ph.D. candidate with dense brown hair and a disciplined beard,
Marczak wasn’t just another excitable, fast-talking Berkeley grad
student. He was a pioneering analyst in a new and unusual theater of
cyber-warfare: the struggle between Middle Eastern freedom activists and
authoritarian governments in countries such as Bahrain and Egypt. He was
also a senior fellow at Citizens Lab, the University of Toronto
“interdisciplinary laboratory” that had almost single-handedly
discovered and alerted the world to how these governments were
monitoring dissidents with spyware quietly marketed by a group of
shadowy European and Israeli companies that have been labeled the first
“cyber-arms dealers.”

Before going to sleep, Marczak, always a tad obsessive, rolled out of
bed to check his phone for messages. He was standing there in his boxer
shorts when he saw it. “Oh my God,” he exclaimed, hopping up and down
with excitement, his bright eyes shining even brighter than usual.

“I think I just found something huge,” he answered, before kissing her
and going into the living room, where he opened his laptop.

When his girlfriend woke the next morning, he was still there.

Marczak had indeed found “something huge.” An activist friend in the
United Arab Emirates had sent him an e-mail containing a single Internet
link, which Marczak was almost certain would, if clicked, release
malignant spyware into his mobile phone. He managed to isolate a portion
of its code, but it was so complex he decided to forward a copy across
San Francisco Bay to engineers at a computer-security outfit called
Lookout, whose offices high in a downtown skyscraper afforded panoramic
views from the Golden Gate Bridge to Oakland.

A pair of Lookout engineers, Andrew Blaich, a sandy-haired
mobile-security specialist, and Max Bazaliy, an intense grad student
from the Ukraine, were the first at the company to study the heavily
obfuscated code.

“I don’t know. Something really, really bad,” Bazaliy answered in his
thick Ukrainian accent.

It took all day for the two to realize just how bad.

It is exceedingly rare to find a never-before-seen vulnerability that
allows a hacker to infiltrate the operating system of a computer or
mobile phone. Amazingly, the program Marczak had found would be shown to
target not one, not two, but three such vulnerabilities.

“Every new line of code, it was like, ‘Oh shit, this can’t be,’ ”
Blaich recalls. “ ‘Oh shit. Oh shit.’ It just went on and on.”

By nightfall, the two engineers were staring in disbelief. “This can
spy on audio, e-mail, text messages . . . everything. Someone spent a
lot of time creating this,” Blaich said.

Bazaliy, a purist, thought it the most beautiful code he had ever seen.
“There’s never been anything like this before,” he said.

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There was a time, a few years back, when the most sophisticated
cyber-warfare tools were still developed and used exclusively by the
world’s most sophisticated cyber-warfare combatants: government spy
agencies, such as the ultra-secret National Security Agency and its
counterparts in Israel and other developed countries and their
arch-rivals in China and Russia. The surveillance and monitoring
capabilities that Edward Snowden unveiled to the world in 2013 were
shocking and little understood, but an ordinary citizen could at least
take comfort in the belief that, if he wasn’t a criminal or a spy, it
was unlikely these tools would ever be used against him.

Ever since Snowden, and even before, experts in cyber-security have
watched warily as a handful of obscure companies launched efforts to
replicate and sell weaponized “government-grade” spyware to the
highest bidders. The ultimate prize, security experts knew, was the
ability to hack remotely into the digital brains of the world’s most
popular hardware—the desktops, laptops, tablets, and especially the
mobile phones made by Apple. And not just break into Apple devices but
actually take control of them. It was a hacker’s dream: the ability to
monitor a user’s communications in real time and also to turn on his
microphone and record his conversations.

Programmers call this ultimate hack a “jailbreak.” Doing it with wires
and cables is not unheard of. Once or twice a year someone, typically an
attention-seeking hacker or computer-security start-up, will announce
finding a vulnerability in the Apple operating system that allows a
jailbreak. Apple, usually within weeks, issues a “patch” to fix it.

Just two weeks before Marczak and the engineers at Lookout encountered
the strange new code, a Chinese company named Pangu had announced a
“tethered” jailbreak—one employing wires and cables—for Apple
mobile operating systems between 9.2 and 9.3.3. It was the first
“public” jailbreak released by anyone in five months.

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But for those interested in hacking Apple devices, the holy grail has
long been a remote jailbreak, that is, one done wirelessly, from across
the street or around the world. Only one is known to have ever been
created, a tool called jailbreakme, first released in 2007; that,
however, required a willing user and hasn’t been updated since 2010. In
September 2015 a little-known company named Zerodium made waves in
Silicon Valley by announcing it would pay a $1 million “bounty” to
anyone who brought it an actual remote jailbreak. Two months later,
without divulging what it intended to do next, Zerodium announced that
someone had claimed the bounty.

Then, last August, came the startling confirmation from Apple itself: a
genuine remote jailbreak “in the wild,” the one discovered and
identified by Marczak and the Lookout researchers. To everyone’s
surprise it had been out there operating secretly for years.

“This is a James Bond story,” says Mike Murray, Lookout’s vice
president of security research and response, a curly-haired 40-year-old
salesman type who formerly headed product-development security at G.E.
“The guys who did this are James Bond villains, evil arms dealers
attacking dissidents in the real world. It’s real. It’s true. This is
finding cyber-weapons being used against someone in the real world.
Before, people only suspected this might be out there.”

“It’s kind of like a stealth bomber,” says Lookout security researcher
Seth Hardy, an intense, well-known former hacker. “It’s one thing to
know they exist. It’s an entirely different thing to have one crash into
your backyard.”

What Happens in Vegas

In the beginning, back in the 1980s and early 1990s, there were computer
hackers, mostly hobbyists, who attracted a lot of media attention by
sneaking into the innards of government and corporate computers and
running up and down their digital hallways unseen. It was, with some
notable exceptions, viewed as harmless fun.

That began to change in 1993, when a group of hacker pals put together
an impromptu convention of sorts in Las Vegas, on a weekend in late July
or August, when hotel rates were the lowest. Called DefCon, a nod to a
favorite hacker movie, WarGames, it grew every year and soon earned a
reputation as an uproarious affair, featuring such shenanigans as
pouring laundry soap into swimming pools and hacking A.T.M.’s. By the
late 1990s a few curious government people began appearing. It became a
kind of game: organizers held a “Spot the Fed” contest, and if a
claimant turned out to be right, he got an “I spotted the Fed”
T-shirt.

With the rise of online commerce, corporate types also became curious
about what these hackers could do with their own and other people’s
computers. As a result, several computer-security companies sprang up
and began hosting a companion convention called Black Hat, “built by
and for the global InfoSec community . . . [featuring] four days
of intense trainings for security practitioners of all levels.”

“The arrival of specialized computer-security companies who exhibited
at Black Hat was a milestone,” says Chris Soghoian, the A.C.L.U.’s
chief technologist. “You had all this money flowing in. There were
parties, organized by vendors, with international D.J.’s to spin music.
Eventually they got rid of the Spot the Fed contest because there were
so many feds coming, to the point where N.S.A. employees would grow
their hair out just to be cool for that one weekend.”

The relationship between hackers and the military-technology complex has
always been an uneasy one. For every “white hat” hacker who signs on
to help a Symantec or a Lockheed-Martin, there is a “black hat” hacker
who sneers at them as sellouts. By the early 2000s, black hats were
emerging as a serious annoyance on the ever expanding Internet. What had
begun in the 1990s as the odd Web-page defacement became an epidemic,
with hundreds of hackers, many from Russia and Eastern Europe, competing
to see who could spray the most digital graffiti on government and
commercial Web sites. Others released harmful viruses and “worms” that
could freeze or destroy software.

The growing chaos fed on itself. The more trouble black-hat hackers
caused on the Internet, the larger computer-security companies grew to
fight them, often with the help of white-hat hackers. A turning point
came in 2006, when someone infiltrated the computers at TJX, the parent
company of such retail brands as T. J. Maxx and Marshalls, and stole
thousands of credit-card numbers. At the time it was a remarkable crime.
While there had been attacks on banks over the years, the TJX hack
showed both black hats and white hats that there was serious money to be
made in cyber-crime or in fighting it. For security companies and
defense contractors, having one’s own hackers was no longer a luxury but
an imperative.

Then as now, the most valuable asset in a hacker’s arsenal is a
so-called zero-day exploit, a previously undiscovered vulnerability in a
piece of software, essentially a secret digital door to the inside.
(“Zero days” refers to the amount of time—i.e., none—a target has
to fix an entirely new kind of hack before damage can be done.) For a
hacker, maintaining a zero day’s secrecy is paramount; once the exploit
becomes known, the target—whether Microsoft, Apple, or another
company—will nail the software door shut, rendering the exploit
unusable. “It used to be that hackers would hold on to their zero days
and trade them for more access or knowledge,” says Hardy. “Not
anymore.”

By 2010 a true black market for zero days was emerging beyond the usual
black market. The turning point came when a French company named Vupen
began to offer bounties for zero days, reportedly as much as $250,000.
Vupen insisted its aim was keeping software safe, though many doubted
that its intentions were so noble. Companies such as Hewlett-Packard and
Microsoft responded with bounties of their own. Though far less than
what Vupen and others were paying, these bounties offered white-hat
hackers a way to make money while keeping their ethics intact. In
addition, as former hackers, they might also end up with lucrative
consulting contracts.

“Vupen led to a divide in the hacker community,” Hardy says. “Do you
burn zero days by selling them, or do you keep them secret? Some hackers
sold. But true black hats kept their cards close.”

In this new black market few knew exactly who the buyers were, but it
was widely assumed that many were governments looking for clever new
ways to spy on their own citizenry. “In 2011, 2012, there was this
transition point where it was still fashionable to brag about how much
money you were making selling zero days,” says Chris Soghoian, “while
at the same time it was not yet unfashionable to acknowledge that you
were facilitating human-rights abuses by governments that use those
tools.”

The Zeitgeist shifted decisively in March 2012, when Forbes magazine
published a memorable photograph of a pasty-faced black-marketeer who
called himself “the Grugq,” sitting in front of a laptop in Bangkok.
To his right was an oversize martini, to his left an open bag of cash.
“That photograph was a milestone,” Soghoian observes. “There had
never been a photo of a hacker arms dealer. It brought a lot of
attention to the industry. And, really, that was the last moment when it
was socially acceptable for people to brag about their role in selling
exploits to governments.”

Government Spies

At the time, Bill Marczak knew little of this. He was just another grad
student, researching Big Data. Marczak was born in New York. His father
worked in finance, moving the family first to Hong Kong and then to the
Persian Gulf kingdom of Bahrain, where Marczak spent his high-school
years. When the Arab Spring unrest broke out, in late 2010, Bahrain soon
became a riot zone, with young protesters seeking Western-style reforms
facing off in the streets against government troops. Marczak, by this
time at Berkeley, watched with fascination as the violence unfolded.
When activists went on Twitter seeking information on the kinds of tear
gas and weaponry the government was using against them, Marczak mined
the Internet for answers. He began writing blog posts, which in 2012 led
him and two other would-be activists to start an advocacy group they
called Bahrain Watch.

Things got strange in May 2012, when three of Marczak’s new
colleagues—based in Washington, London, and the Bahraini capital,
Manama—received suspicious e-mails from previously unknown
correspondents. Marczak studied them with a security researcher named
Morgan Marquis-Boire, who worked at Citizen Lab, then known mostly for
its work tracking Chinese cyber-attacks on Tibetan activist groups. A
link in the e-mails took the user to an attached blank Microsoft Word
document, which the two young researchers discovered would secretly load
spyware onto the user’s computer. As they dug deep into the suspicious
code, the researchers found repeated use of the word “FinSpy.”

FinSpy was quickly identified as part of a spyware product named
“FinFisher,” created and marketed by a British company called Gamma
Group, which billed FinFisher as a new way for police and intelligence
agencies to monitor criminals and spies. Like several other new entrants
into the spyware field, Gamma termed its products “lawful intercept”
tools. Just the year before, however, protesters who had stormed Egypt’s
state security headquarters carted out boxes of internal government
documents, one of them an offer from the Egyptian secret police to buy
the FinFisher program for $353,000. The Egyptian discovery suggested
that Gamma, far from limiting its clients to those who targeted
criminals, was quietly marketing FinFisher to authoritarian governments
to monitor dissidents. Marczak’s work seemed to confirm it. But Gamma,
contacted by a Bloomberg News reporter, denied selling FinFisher to the
Bahraini government, suggesting it was using a stolen copy.

A team of researchers at Rapid7, a Boston software-security outfit, set
out to prove Gamma was lying. When a Rapid7 analyst named Claudio
Guarnieri examined FinFisher’s code, he saw that when he pinged the I.P.
address of a collection server it replied with an unusual response:
“Hallo Steffi.” Guarnieri then used a program to survey every server
on the Internet—roughly 75 million of them—to see if others
responded the same. It took a couple of long weeks, but in the end the
Rapid7 scan turned up 11 I.P. addresses in 10 countries, including
Qatar, Ethiopia, and the U.A.E., that were known to monitor dissidents.

But Gamma wasn’t alone. In July 2012, days after Citizen Lab released
its report on Gamma online, a Moroccan activist group named Mamfakinch,
which had published articles critical of the government, received an
anonymous e-mail promising a sensitive scoop. A similar e-mail,
purportedly from “Arabic WikiLeaks,” arrived in the in-box of the
U.A.E. dissident Ahmed Mansoor, who had been imprisoned for insulting
members of the government. When Mansoor clicked an attachment in the
e-mail, it downloaded spyware onto his computer that monitored his every
keystroke and communication.

Both Mamfakinch and Mansoor contacted security experts. A Russian
anti-virus company, Dr Web, was the first to publish an analysis
confirming that both of their devices contained spyware marketed by a
Milan-based company named Hacking Team. Unlike Gamma, Hacking Team was
well known in cyber-circles. Founded by two Italian programmers in 2003,
it had become one of the first sellers of commercial hacking and
surveillance tools after its initial software package was embraced by
the Milan police to spy on Italian citizens. With offices in three
countries, including the U.S., it was probably the best known of the new
breed of cyber-arms dealers. It insisted it refused to sell its products
to a country blacklisted by NATO, but a Citizen Lab report showed that
its tools were being used by the Moroccan and U.A.E. governments.

Then came an ironic comeuppance. Someone, later identified as a
previously unknown hacker named “Phineas Fisher,” managed to take
control of Hacking Team’s Twitter account and triggered a massive data
breach. The tweets contained links to more than 400 gigabytes of
internal Hacking Team data, including e-mails, corporate files,
invoices, and source code. There was even a client list, which put the
lie to the claims that Hacking Team wasn’t selling its products to
repressive governments. The clients included Morocco, Malaysia, Saudi
Arabia, Uganda, Egypt, Oman, Turkey, Uzbekistan, Nigeria, Ethiopia,
Sudan, Kazakhstan, Azerbaijan, Bahrain, and Albania, not to mention
three American clients: the F.B.I., the Drug Enforcement Administration,
and the Department of Defense. (Hacking Team did not respond to requests
for comment.)

“The Hacking Team thing was monumental,” says Chris Soghoian. “Prior
to that, the only thing that researchers had was circumstantial evidence
that this was going on. They would find a FinFisher server in Morocco
and say that’s evidence the government was using it. Before Hacking
Team, there was no smoking gun.”

But though a handful of Hacking Team clients, including the D.E.A.,
severed ties with the company, nothing much changed but perceptions.
Hacking Team, like Gamma, continues in business—and a booming business
it is. One expert estimates the global market at $5 billion.

It was just a month after the Hacking Team data breach, in fact, that
Zerodium, a company whose C.E.O. had founded Vupen, announced its $1
million bounty for the mother of all commercial hacking tools: a remote
jailbreak.

A few days after the Zerodium bounty was claimed, Marczak got a message
from Rori Donaghy, a London-based writer on human-rights issues in the
Middle East, who had been publishing articles critical of the United
Arab Emirates government for a Web site called Middle East Eye. Donaghy
had received an invitation to join a panel discussion from a group he
had never heard of, “the Right to Fight.” He thought a link included
in the e-mail looked suspicious. Marczak discovered that clicking it
took the user to a Microsoft Word document that contained only a logo
and a description for the fake “the Right to Fight” group—while
secretly inserting spyware onto the user’s computer. He checked with
other Persian Gulf dissidents and found that many had received the same
strange e-mail and had already clicked the link. As Citizen Lab often
did, Marczak gave this unknown attacker a code name: Stealth Falcon.

Once Marczak identified the server that had sent the e-mail, he
“fingerprinted” it and began to search the Internet for other machines
with the same fingerprint. There were hundreds. Each had a domain name.
Most were registered with a “privacy protection” service, meaning
Marczak couldn’t learn who had registered the domains. But about 10
weren’t. Checking the names and addresses of the entities that had
registered the sites, he realized the information was all fake. So he
checked to see if these fictitious users had created other sites.

One had. It had created three domain names, all impersonating a popular
Web site for Arab news and gossip. Digging deeper, he found each was
associated with something called “SMSer.net.” When he searched the
Internet for servers with “SMS” in their domain names, he found about
120, almost all associated with mobile-phone companies in developing
countries such as Mexico and Mozambique. Next Marczak checked who had
registered these domain names. Most of the street addresses associated
with the domain names were seemingly located in Israel.

“That’s when I thought, Hmm, I wonder if this is NSO,” he remembers.

NSO Group was a six-year-old Israeli spyware company so secretive it
didn’t even have a corporate Web site. Marczak knew of it from a single
entry on an Israeli Ministry of Defense Web site, in which the company
claimed to have developed cutting-edge spyware. Checking further, he was
surprised to find that two years earlier it had sold a controlling stake
in its business to Francisco Partners, a San Francisco hedge fund, for
$120 million.

Though he strongly suspected NSO software was being used in the Stealth
Falcon attacks, Marczak couldn’t prove it. Whoever it was, he realized,
knew what they were doing. By the time Marczak finished tracking Stealth
Falcon, the following spring, he found its campaign had originated from
67 different servers and had lured more than 400 people into clicking
its links and loading spyware onto their devices. He also discovered
that 24 U.A.E. citizens had been targeted with the same spyware in posts
sent via Twitter. Three had been arrested shortly after. Another was
convicted of insulting the U.A.E.’s rulers in absentia. His Citizen Lab
report, issued last May, described the Stealth Falcon attacks in detail,
suggesting that the U.A.E. was behind them, but stopped short of naming
NSO.

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SECURE ENVIRONMENT
Lookout employees Mike Murray, Andrew Blaich, Kristy Edwards, and Seth Hardy, at their San Francisco headquarters.


The e-mail Marczak received that night last August in Berkeley came from
Ahmed Mansoor, the U.A.E. dissident, who remained under relentless
harassment by his government. Mansoor had been imprisoned and beaten on
the street, then had his passport confiscated. Someone stole his car.
His bank account was drained of $140,000—all while he was fighting
off multiple attempts by the U.A.E. government to hack his computers and
phones.

What got Marczak so excited was a U.R.L. he spied at the bottom of a
text Mansoor had sent: “sms.webadv.co.” He remembered it as one of the
hundreds of servers he had linked to NSO: here, it appeared, was the
evidence he needed to pin the Stealth Falcon campaign on the Israeli
company. In his living room, Marczak wrote a program that allowed his
laptop to impersonate a mobile phone, the device Mansoor would have
used. By doing so, he hoped to reconnoiter the spyware’s server,
wherever it was, without infecting his computer. The Hacking Team tools
released by Phineas Fisher worked only on older versions of Android
phones; if contacted by a newer version, it sent back a harmless
“decoy” page. Marczak assumed this program worked the same way.

It didn’t. When Marczak clicked the link contained in Mansoor’s e-mail,
his Safari browser suddenly opened and then immediately shut. Monitoring
what was happening in the background, he could see what appeared to be
the first stage of a spyware program uploading onto his laptop. Before
it could do any damage, he severed the connection.

But he had seen enough. In an attempt to impersonate Mansoor, Marczak
had been using the penultimate version of the Apple O.S., iOS 9.3.3. The
NSO spyware, if that’s what it was, could clearly infiltrate it, via
Safari. And because the newest version of iOS, 9.3.4., didn’t change
anything in Safari, Marczak realized the spyware had to be using an
exploit never before seen: a zero day.

When he went to study the JavaScript code he had captured on his laptop,
however, Marczak was disappointed. It was gibberish, page after page of
heavily obfuscated code. This was above his pay grade. To figure out
what the program actually was, he would need serious help.

One of his Citizen Lab colleagues suggested that Marczak reach out to
Seth Hardy, a former Citizen Lab analyst who worked at Lookout, a
top-shelf purveyor of security software that specializes in mobile
phones.

Lookout had been founded in 2007 by three University of Southern
California computer-security specialists: John Hering, Kevin Mahaffey,
and James Burgess. While fooling around with new technologies the three
discovered a vulnerability in the Nokia 3610’s Bluetooth connection to
wireless headsets, giving unauthorized access potentially to millions of
mobile devices. They informed Nokia, but the company would not take the
problem seriously because it believed Bluetooth communication was
limited to a 30-foot range.

To prove their point the three hackers built a “BlueSniper rifle”—a
piece of hardware that enabled them to extend Bluetooth’s range to more
than a mile—and took it to the 2005 Academy Awards, where they easily
collected data from dozens of celebrities’ phones. Nokia was finally
persuaded to fix the problem.

Seth Hardy took the call not long after sunrise. “He told us this
suspicious link had compromised an iPhone with just one click, which
suggested someone had weaponized a zero-day exploit,” Hardy recalls.
“I mean, that’s incredibly rare. It sounded like it could be big.”

Hardy thought of Max Bazaliy, a 29-year-old Ph.D. candidate at Kiev
Polytechnic. Bazaliy was the only person at Lookout who had actually
created a jailbreak, albeit a “public” jailbreak using wires and
cables. He and Andrew Blaich furrowed their brows as they scrolled down
the code, nearly 1,400 lines of multicolored commands in seemingly
random order, tossed about like a salad. “This is clearly seriously bad
stuff, but we had no idea what it was,” recalls Mike Murray, the
engineers’ boss. “So we said, ‘Let’s guess at the worst-case scenario
and see if it’s that.’ A worst-case scenario is a remote jailbreak.”

Code Red

Many spyware programs are packaged in three stages. Stage One
infiltrates the user’s device. Stage Two prepares the device for
monitoring; when finished, it contacts a server to deliver the actual
spyware package. The spyware’s delivery and setup constitutes Stage
Three. Because it had taken control of Marczak’s Safari browser, the
Lookout analysts were confident that Marczak’s code was Stage One of
spyware using a zero day. “A Safari exploit is huge,” Murray says.
“If you have that, you can get into any Apple device in the world.”

The code Marczak discovered was “obfuscated,” that is, jumbled so
thoroughly it was impossible to understand. It took several hours for
Blaich and Bazaliy to identify the hidden program’s components and line
them up in order. After that, they searched for a way to find the
program’s second stage. Unfortunately, Marczak had severed his
connection before Stage Two could upload. Worse, the link he had clicked
was a “single use” link, the digital equivalent of a “Mission:
Impossible” message that bursts into flame after one listen.

But Bazaliy and Blaich thought they might locate it if they could track
down the server where the spyware originated. Already they could see a
series of U.R.L.’s in the Stage One code. Once they had identified which
one was likely the original server, they saw that it could be contacted
only by a computer in the Middle East. Bazaliy set to work building a
V.P.N. (virtual private network) tunnel, a commonly used bit of software
that masks a telephone’s G.P.S. coordinates, routing his path to the
server through a series of foreign countries before finding one he could
use in the U.A.E. By scanning each of the U.R.L.’s, the team was able to
identify bits and pieces of code it believed to be Stage Two.

There was just one hitch: “It looks like a jailbreak, but it’s
encrypted, which is a problem,” recalls Bazaliy. “We have no idea what
algorithm it was using for its decryption.”

They spent hours that day searching for the algorithm before realizing
the answer had been in front of them all along. Eventually Bazaliy
realized that Stage One must know how to decrypt Stage Two in order to
launch it. So they searched for elements of a decryption algorithm in
Stage One and slowly pieced one together.

It was only upon decrypting Stage Two that they began to amass evidence
of what the program was. The key lay in references within the code to
the iPhone’s digital brain, called the “kernel.” The way Apple, like
many computer-makers, protects the kernel from infiltration is by
“randomizing,” or constantly changing, its internal address; if a
hacking program can be viewed as a hunter, the kernel is a jackrabbit
that constantly darts between hedgerows to hide from it. The eureka
moment came when Bazaliy found the code “calling” for the kernel, much
as a hunter would use a duck call to find ducks. “This is how Max knew
it was a jailbreak,” Mike Murray explains. “The code in Stage Two was
all about how to find the kernel. The only reason to find a kernel is to
attack it. The only reason to call for the kernel is to attempt a
jailbreak.”

To their surprise, the subprogram contained a second zero-day exploit.
Two zero days in one program: no one had ever seen anything like it.
Bazaliy thought it had to be a remote jailbreak. But unless they could
find and analyze the third stage of code, there was no way to prove it.
Any chance of that, however, had died the moment Marczak clicked on the
link. It appeared they were at a dead end.

Then they got lucky. As the team at Lookout struggled to unravel the
strange code that Wednesday, Marczak was surprised to receive a second
message from Mansoor. He had gotten yet another suspicious e-mail, and,
incredibly, it contained a link that directed him again to
sms.webadv.co. The U.A.E. government, Marczak wagered, was not only
persistent but overconfident, or at least unconcerned about being
discovered.

This time he wasn’t taking any chances. What he needed, Marczak
realized, was to impersonate Mansour’s iPhone; if the host server saw
the link clicked by a different kind of phone than Mansour’s, it might
suspect something amiss. Mansour used a slightly older phone, an iPhone
5, running the 9.3.3 version of iOS. Marczak began asking around his
office in downtown Berkeley, seeing if anybody had one. It wasn’t an
easy favor to ask; after all, he intended to infect the phone with
cutting-edge spyware. Still, after a few hours his office-mate, a
computer-security specialist named Nicholas Weaver, volunteered that his
girlfriend had just upgraded her iPhone but had kept the older model to
use to listen to music at her job in a winery.

Thursday morning, having wiped the old phone clean of data, Weaver
brought it into the office the two men shared. They closed the door
behind them; no one else knew what they were attempting. With Weaver at
his shoulder, Marczak first set up a wireless access point, essentially
a mini-network all his own, the better to contain the dangerous code. He
then hooked his laptop via Wi-Fi to the old iPhone, so that he could
watch on his computer screen the images of whatever code secretly
invaded the phone. Lastly he arranged a V.P.N. so that the phone
appeared to be calling from the U.A.E.

When they were finished, Marczak pasted the link into the phone’s Safari
browser. Then, with a deep breath, he clicked on the link. In an instant
a blank Web page opened—and then closed itself 10 seconds later.
“Ohhhh, that’s an exploit,” Marczak murmured. He had seen enough
spyware to realize the sudden opening and closing of Safari almost
certainly meant a hostile program was using an undiscovered exploit to
hack into the phone. It took a few seconds for him to fully comprehend
what this might mean: if alien code next headed for the kernel, he might
be seeing a remote jailbreak “in the wild,” as programmers call it,
something no one had ever witnessed before.

“O.K.,” he said, “this is completely not possible to do.”

Suddenly lines of colorful computer code began manically unspooling down
his screen: a view of the alien code invading the phone. “The phone is
totally calm,” he remembers. “But the laptop is going crazy.” If
Stage One of the code was the Safari exploit, this new code had to be a
full Stage Two, a version of which the Lookout engineers had already
begun assembling. It was designed to break down the kernel’s defenses in
preparation for delivery of the actual spyware. And that, Marczak
realized with a start, was exactly what was happening. The code was
attempting a remote jailbreak.

This all happened in a matter of seconds. In the next moment or so, he
and Weaver watched the laptop screen as alien code invaded the phone’s
kernel. When the code on his laptop screen paused, then began once more,
they could see it had now finished its preparations and was seeking to
establish contact with a host—no doubt a computer server controlled by
the U.A.E. government. But for some reason the phone didn’t make
contact. Its request went unanswered.

Marczak scrunched his brow. Ninety seconds later the phone tried again.
“There it goes,” he said, expecting it was a momentary glitch. But
this call too went unanswered. He and Weaver exchanged glances. This was
odd. “Why is it failing?” Marczak asked.

They watched in silence as the phone tried a third time and failed. Then
it tried again.

The code made a fifth call. Nothing. No one was answering. Marczak was
starting to grow dejected. It appeared this was a solid attempt at a
remote jailbreak, but not a successful one.

Then, on the sixth call, the server answered. A connection was
established. Suddenly the laptop screen burst into a blizzard of
lightning-fast code, “just this huge unmitigated blob” of code being
delivered from the host directly into the phone’s kernel. It was the
actual spyware. If all the code to this point had been thousands of
aliens preparing the Earth for invasion, this was the mother ship.

For several moments Marczak and Weaver watched in silence, stunned to
see evidence of an actual remote jailbreak in the wild. Then Marczak saw
the danger they were in. If the spyware was transferring information
back to a host, the data might well include the phone’s actual G.P.S.
coordinates. The host would know where they were.

Once they were certain the entire Third Stage had loaded, Marczak ripped
out the cables connecting the phone to the laptop. Then he snatched up
the phone, turned off its power, and placed it in a metal desk drawer
they kept for the rare occasions they needed to isolate a piece of
hardware. The connection to the host was severed.

For a moment they just sat there, grinning like children. Then both men
let out whoops of joy and exchanged an exuberant high five.

“Damn,” Weaver finally said. “It feels good to be a gangsta.”

All that weekend the Lookout team worked around the clock studying the
beast Marczak had captured. They found a third zero day in the complete
Stage Two, making this probably the most sophisticated spyware ever
identified. Max Bazaliy discovered several references to “NSO,”
deepening their conviction that the Israeli company was responsible. If
so, what they were seeing was likely NSO’s flagship surveillance
software, called Pegasus. (NSO executives could not be reached for
comment, but in August, NSO emphasized in a statement to Forbes that it
does not operate spyware, but merely sells it. “The company sells only
to authorized governmental agencies . . . . The agreements signed with
the company’s customers require that the company’s products only be used
in a lawful manner. Specifically, the products may only be used for the
prevention and investigation of crimes.”)

By reverse-engineering it, they found that it could simultaneously
monitor a phone’s e-mail, Internet use, keystrokes, Skype chats, and a
slew of other applications. It could turn on a microphone and listen to
a user’s conversations. “We’ve seen all these capabilities by
themselves,” says Mike Murray. “I don’t think anyone has ever seen
them in one piece of software before.”

“It was amazingly sophisticated,” says Blaich. “Normally spyware is a
battery hog. One way you know you might be infected is if you get
messages saying your battery is low. There is actual code in here that
makes it battery-conscious. If it senses it’s using too much battery, it
will actually shut itself down.”

“It’s amazing,” says Seth Hardy. “It will wait till the user goes on
Wi-Fi to send off large packets of information, to avoid killing the
battery. We’d never seen anything like that before this.”

The next step was to alert Apple. Murray wanted to hold off till they
fully understood the program, but Marczak insisted they call
immediately. The risk to iPhone users was too great. A conference call
was arranged that Monday. “Apple is pretty funny,” Hardy remembers.
“So we told them we had a remote jailbreak. And they were like, ‘Yeah
yeah yeah, we’ve seen this before—send us what you have.’ So we did,
and a few hours later they called back and, you know, very serious,
[said] ‘O.K., send us everything you got.’ ”

Apple managed to issue a “patch” to fix the three zero-day exploits
just 10 days after the call, an engineering feat that surprised many of
those involved. An Apple spokesman declined comment, but a Silicon
Valley security consultant who works closely with the company says,
“Apple had never seen anything like this—ever. This was an incredibly
sophisticated nation-state attack, kind of breathtaking in its scope.
This took a herculean effort on their part to patch it so fast. It was
Katy-bar-the-door over there.”

It’s an uplifting story, but the fact is Apple and other computer-makers
are fighting a losing battle. As long as there are hackers, they will
continue to find ways to hack any device that interfaces with them.
These dangers were highlighted this fall when a New England company
found itself the target of a mass denial-of-service attack from millions
of non-computer “zombie devices” connected to the Internet—most
notably baby monitors.

“What these cyber-arms dealers have done is democratize digital
surveillance,” says the A.C.L.U.’s Chris Soghoian. “The surveillance
tools once only used by big governments are now available to anyone with
a couple hundred grand to spend.” In fact, they may be coming to your
iPhone sometime soon.