The Israeli cyber firm NSO Group provides information to the Jewish state's government about who is using the company's spying products, including the Pegasus surveillance tool, The Washington Post (WaPo) has cited unnamed US sources as saying.
The Pegasus phone spyware, once installed, can read text messages and other data on a mobile device, as well as access a smartphone's microphone and camera.
One of the sources claimed "it's crazy to think that NSO wouldn't share sensitive national security information with the government of Israel".
"That doesn't mean they're a front for the Israeli security agencies, but governments around the world assume that NSO is working with Israel", the insider added.
The remarks were followed by a response from a spokesperson for Israel's Ministry of Defence, who insisted that "Israel does not have access to the information gathered by NSO's clients".
The company itself, in turn, told WaPo in a written statement that it "vehemently" denies "the suggestions that the Israeli government monitors the use of our customers' systems, which is the type of conspiracy theory that our critics peddle".
According to the firm, "such claims are part of the salacious narrative about NSO Group that has been strategically concocted by several closely aligned special interest groups, among them your 'anonymous officials' who say they 'assume' something is taking place".
The statement follows a joint investigation by 17 media organisations, including The Washington Post, The Guardian, and Le Monde that revealed on Sunday that multiple human rights activists, politicians, lawyers, and journalists had been targeted in a massive hacking campaign launched by foreign governments that used NSO Group's Pegasus spyware.
Le Monde has reported that a smartphone belonging to French President Emmanuel Macron was targeted for surveillance by the Moroccan government using Pegasus spyware.
More than a dozen world leaders are believed to be among the 50,000 people whose smartphones were reportedly compromised by the NSO spyware.
Apart from Macron's phone, the Pegasus spyware also reportedly rode roughshod over the devices of Iraqi President Barham Salih, South African President Cyril Ramaphosa, the prime ministers of Pakistan, Egypt, and Morocco, as well as seven former heads of government from countries including Lebanon, Uganda, and Belgium.
Israeli Defence Minister Benny Gantz responded by stating that the Jewish state "as a liberal western democracy, controls exports of cyber products in accordance with its defence export control law, complying with international export control regimes".
The suit argued that NSO's Pegasus allows agents to take control of a phone via WhatsApp and subsequently control a user's cameras and microphones from remote servers, harvesting, or "vacuuming" personal data and geolocations.
The company vehemently dismissed the accusations, claiming that its technology "is only licensed, as a lawful solution, to government intelligence and law enforcement agencies for the sole purpose of preventing and investigating terror and serious crime".