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It would be naive to think the government itself would not use such a powerful source of intel. Regardless of your political affiliation, states act according to their self-interest. In international politics, the only constraints are what you can do, and how much you can get away with. If one can find a reasonable motive and prove a possible causal link, absent of further evidence, the prior is guilty.
Israel isn't a signatory of the Wassenar Arrangement, which helped Israeli startups rapidly corner the 0-Day and Exploit Market.
Before the 2010s, the Israeli software scene was largely targeting commodity use cases by trying to undercut existing vendors like Cisco or Arista in price.
Israeli companies saw a market opening that could differentiate them and decided to take it.
It's a segment that would have existed in the US, France, or CEE but regulations prevented it from emerging.
These mercenary corporations are widely known to sell their product to anybody, including Israel's biggest enemies. This is an attempt at guilt by association, or propaganda using the association fallacy.
The government of Israel may be guilty of many things, but this is probably not one of them.
Either Israel is involved themselves, which is quite plausible given their history of this shit.
Or Israel is not involved, and they massively fucked up by letting their malware be used against their supposed allies.
In both cases, we are left with the question: Why are we letting this country develop malware with our approval and funding?
Because Western governments are the biggest customers of these companies.
Using Israeli companies makes it much more difficult for criminal defense lawyers to challenge the findings of investigations, additionally Israeli companies aren't bound by ethics codes and whatnot. Our governments can turn a blind eye what these companies are actually doing - we pay them money and get access to a target's device, no questions needed/asked.