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As far as I understand from The Godfather, Luca Brasi's loyalty wasn't known outside the Corleone family, and the exchange before he was murdered was pretty fast. The only thing I noticed is that Luca was pretty "slow" to react when he was proposed a notable amount of money.

Did Tattaglia know Luca was a spy, or did he simply kill him because of the rivalry with the Corleone family?

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Did Tattaglia know Luca was a spy, or did he simply kill him because of the rivalry with the Corleone family?

It's not clear but it's likely that the reason was....

Just In Case

There's no indication that Tattaglia knew Brasi was gathering intelligence and Brasi had never sworn any kind of loyalty to Tattaglia or denied his underlying loyalty to the Don.

The first meeting was all above-board, Tattaglia offering him a job to work in the Family business as enforcer. The flirtation went on for nearly a month. Luca played his role of man infatuated with a young beautiful girl, Bruno Tattaglia the role of a businessman trying to recruit an able executive from a rival. At one such meeting, Luca pretended to be swayed, then said, “But one thing must be understood. I will never go against the Godfather. Don Corleone is a man I respect. I understand that he must put his sons before me in the Family business.”

The Godfather - Mario Puzo

However, Brasi's reputation for violence was considerable and Tattaglia couldn't take the chance that Brasi might take action against him because of Brasi's loyalty to the Don.

So, from a tactical point of view, it makes sense to remove the potential "threat" of Brasi from the field.

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After rewatching the scene I have the feeling that Tattaglia and Sollozzo considered the possibility of killing him (hence they hired the assassin) but they wasn't 100% sure that they would do it.

The "job interview" was also a way for them to test Luca's loyalty and they weren't convinced: Luca's stays cold and refuses to shake Virgil's hand. I've noticed the importance of touch contact (shaking hands, gangster-hugs, kisses...) in mob movies, to notify loyalty. After Brasi's refusal, we can see their behaviour slightly change and, it seems, they send the subtle cue to the hitman to do it.

Maybe a more friendly Luca, shaking hands, would have convinced them to actually recruit him.

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    I just rewatched it and never noticed seeing the fishes in the window at 0:29. – Andy Lester Sep 12 at 2:24

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