The Splinternet and the Startup Nation: Where Does Israel Stand?

When Edward Snowden released thousands of classified NSA documents in June 2013, one detail barely registered in Tel Aviv but should have: a 2009 memorandum of understanding under which the NSA shared raw surveillance data with Israel’s SIGINT National Unit, including data on American citizens, with minimal filtering. The relationship, one leaked document noted, had become “the catalyst for a broader intelligence relationship between the United States and Israel.”

Thirteen years on, the world that Snowden revealed has not been reformed. It has fractured. The single, borderless internet that once seemed as inevitable as gravity is splintering into rival blocs, each governed by its own rules, its own infrastructure and its own conception of sovereignty. China’s Great Firewall, once mocked by Bill Clinton as an exercise in nailing jelly to a wall, now shields 1.1 billion users from the global web and is being exported as a turnkey product to Kazakhstan, Pakistan, Ethiopia and Myanmar. Russia’s sovereign internet decree, which took effect in March 2026, gives Moscow the legal authority to reroute domestic traffic in real time and, if it chooses, to sever the RuNet from the outside world entirely. The European Union has staked out a third position through GDPR, the Digital Services Act and the AI Act, constructing a rights based regulatory perimeter that imposes its own form of extraterritorial control. India, meanwhile, conducts more internet shutdowns than any country on earth while simultaneously championing its open digital public infrastructure as a model for the Global South.

Where does Israel fit in this tectonic rearrangement? The answer is: everywhere and nowhere, a position that is becoming increasingly difficult to sustain.

Israel is, by any measure, one of the most deeply integrated nodes of the Western digital ecosystem. Unit 8200, the IDF’s signals intelligence unit and the country’s largest military unit, has produced alumni who went on to found over a thousand technology companies. As of mid 2025, more than 1,400 veterans of Israeli intelligence were working in American technology firms, with 900 from Unit 8200 alone. When Google acquired the Israeli cloud security firm Wiz for $32 billion in March 2026, the four co founders were all Unit 8200 graduates. Israel’s tech sector does not merely participate in the open internet; it underwrites critical layers of it.

Yet Israel is simultaneously one of the world’s foremost architects of the surveillance tools that accelerate the internet’s fragmentation. The Pegasus spyware developed by NSO Group, classified as a military export and licensed by the Defence Ministry, has been deployed in over fifty countries. Successive investigations have revealed its use against journalists, human rights defenders, lawyers and heads of state. Israel has treated NSO as a de facto instrument of foreign policy, approving sales to Gulf states as part of the diplomatic choreography around the Abraham Accords while blocking sales to Ukraine to avoid antagonising Russia. The Pegasus Project of 2021 was not merely a privacy scandal. It was a demonstration that the open internet’s foundational assumption, that data flows freely and securely between consenting parties, had been rendered obsolete by state sponsored commercial intrusion.

The Snowden disclosures revealed the plumbing. The Pegasus affair revealed the product line. Together, they illustrate Israel’s paradox: a nation whose prosperity depends on the open internet, yet whose security establishment profits from undermining the trust on which that openness rests.

This paradox has now acquired a new and more dangerous dimension. In June 2026, the US Commerce Department ordered Anthropic to suspend global access to its most powerful AI models on national security grounds, barring all foreign nationals from using them. Israeli researchers, developers and defence contractors lost access overnight, collateral damage in a dispute between Washington and a single company. The Institute for National Security Studies in Tel Aviv recognised the implications swiftly, publishing an assessment warning that Israel confronts a transition from “data sovereignty” to “access sovereignty,” where the advantage of states will be determined not only by their ability to develop artificial intelligence but by their ability to secure continuous access to the world’s most advanced models. A Times of Israel blog post described the moment bluntly: a “Silicon Iron Curtain” is falling.

Israel has begun to respond. Its sweeping data protection reform, which took effect in August 2025, introduced administrative fines of up to five per cent of annual turnover, mandatory data protection officers and new provisions for law enforcement access. The INSS has called for digital sovereignty to be treated as a strategic national asset on a par with energy and water, and for a permanent forum linking government, the defence establishment, industry and academia. The National Digital Strategy 2025 to 2029 is intended to anchor these efforts in institutional form.

But institutional responses, however necessary, do not resolve the underlying tension. Israel cannot simultaneously be the startup nation that thrives on open data flows, the cyber arms dealer that sells intrusion tools to authoritarian clients and the strategic ally that expects uninterrupted access to American frontier technology. The Snowden saga showed that even the closest intelligence partnerships rest on a foundation of mutual exploitation. The Anthropic affair shows that Washington can turn the tap off at will, and that even allies sit downstream.

The splinternet is not coming. It is here. Russia has formalised its isolation. China perfected it years ago. The European Union is building a regulatory fortress. And the United States, under an administration that treats technology as a lever of transactional power, is demonstrating that openness is a privilege it can revoke. Israel, with its extraordinary cyber talent, its deep integration into the Western tech stack and its unresolved contradictions, must now decide which side of the fracture it intends to occupy, and whether the tools it has sold to fragment others’ internets will ultimately fragment its own.