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With New Tech, NSA Can Hack Computers Not on Internet; Some Products Getting Less Expensive, Others More, in 2014; New Video of POW Bo Bergdahl; Apple Settles Over Apps Purchased by Kids Without Parents Permission; Apple Refunds App Purchases; Gay Activism Threatens Career; Hot Australian Open

Aired January 15, 2014 - 12:30   ET



SUZANNE MALVEAUX, CNN ANCHOR: We are tracking today a report about your privacy, the NSA, just how far this agency might actually be able to reach into your life online everywhere.

"The New York Times," now pointing to some documents that were leaked by Edward Snowden that describe a secret capability here, developed by the NSA to look at data stored on computers even when the computers are not connected to the Internet. It's unbelievable.

Wolf Blitzer joining us, Wolf, tell us about the secret technology that we're learning about today.

WOLF BLITZER, CNN ANCHOR, "THE SITUATION ROOM": It really is amazing, Suzanne, and "The New York Times" has a very lengthy article quoting experts, U.S. officials, others about this.

It's really amazing that there's about a hundred thousand or so, supposedly, these computers that have been infiltrated by the National Security Agency with these tiny circuit boards and they can emit radio transmissions.

You can send radio transmissions through these little tiny circuit boards planted on these computers in various foreign countries -- there's no evidence it's being done here in the United States -- to either receive, to get information from those computers, or to go ahead and launch cyber-attacks to attack various aspects of their programs, along the lines of what the U.S. did against Iran's computers several years ago, the so-called Stuxnet program that eventually resulted in the destruction of some parts, key aspects of Iran's nuclear program. It was eventually disclosed back in 2012.

But it really is a fascinating insight in how sophisticated this technology, the cyberwarfare has become, the targets of this potential activity, what it can do, what it can't do. But it is pretty amazing.

MALVEAUX: Yeah, it is. It's a fascinating read, and it certainly sounds like science fiction and I.T., all combined. It's hard to believe that this is even happening or even possible. The president has got to answer a lot of questions, and he's been given a lot of criticism, a lot of grief, over the behavior of the NSA. He's got a speech on Friday to address some of all of this. What do we anticipate, Wolf, that he needs to say to at least calm the nerves of Americans and potentially allies overseas who are watching and learning about this?

BLITZER: He's going to announce which reforms he's going to support. As you know, he had a five-member panel that came up with 40 or 50 -- 46, I think -- specific recommendations, how to modify the NSA surveillance program. He's going to announce which ones he's going to accept, which ones he's not presumably going to accept.

And he's going to try to reassure the American public that the NSA is not listening in on their phone conversations, not reading their email, that they only do that, even though they only have this metadata surveillance program, when there is a real legitimate suspicion that there is a foreign terrorist organization or individual involved.

And then they'll go and check it out, but only after they get the authorization from the FISA courts, those Foreign Intelligence Surveillance courts.

So he's going to try to reassure the American public and the international community.

And there's been a lot of outrage internationally, including from some friendly countries, the notion that the U.S. has been eavesdropping, for example, on Angela Merkel, the chancellor of Germany, her personal phone conversations.

I think he's going to go out of his way to reassure them that the U.S. is not going to be engaged in that. I don't think he'll eliminate this whole metadata program, because there is legitimate concern, if you listen to his advisers, that potentially if you do, if you walk away from that, that could undermine efforts to prevent another 9/11-type of attack.

MALVEAUX: We're going to listen closely on Friday, just what kind of recommendations he's making and what is acceptable when it comes to searching and potentially spying in our computer systems.

Wolf, thank you very much. Appreciate it.

The extension of unemployment benefits now seems to be on the back burner, because it leaves 1 million people now in limbo. The benefits, they actually expired in December, and the Senate bid to restore them failed to clear what was a procedural vote yesterday.

So, Democratic leaders, they're arguing now that leaving long-term jobless Americans, folks who don't have jobs, without this safety net is just unacceptable. They also say that it hurts the economy since there is less money for Americans to spend on goods and services.

Well, the talks, they broke down over how are you going to pay for this? How do you pay for those benefits which run about $25 billion a year?

Have you noticed? Gas is a little bit cheaper this year. Our CNN Money team says that this is just one of a couple of things, several things, that you're going to be paying less for. There's a flip side, however, to this report. You're also going to be paying more for some things.

Alison Kosik, joining from us the New York Stock Exchange, I love this story, Alison. Tell us -- let's just start with the good stuff, the good news.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes, this is a good story, because this is kind of news you can really work with all year.

So, gas is a biggie on the list. Gas is expected to be cheaper this year. I had to do a double-take to look at this. This is after gas prices on the average fell to $3.49 last year to the lowest average price in three years, gas prices expected to keep falling.

For a gallon of gas, you'll pay an average of $3.30 today. Why is this happening? For one, production is up, cars also getting more and more fuel-efficient.

Also getting cheaper, electric cars. Even Mitsubishi cut its price on its i-MiEV. Others doing the same. This is because competition is tight, more electric cars getting the market.

Cell phone service, I couldn't believe this one. That's expected to get cheaper, as well. Again, all about the competition, we saw this kind of being battled out between T-Mobile and AT&T in a price war, both offering big discounts to customers who switch carriers. So expect cell phone service to get cheaper, as well.

Tablets are expected to get cheaper, as well. I-Pads are still expensive, up to $900, but low-cost tablets are beginning to flood into the market. One is actually at $39.99.

MALVEAUX: Nice! Very affordable.

The bad news? What are we going to start spending more on?

KOSIK: What's going to be more expensive this year? Yay, taxes. The tax man cometh and he'll be charging more this year.

This is because a bunch of tax credits expired last year. There were credits for teachers who bought supplies and also making energy- efficient improvements on your house. Those credits went away.

Also a penalty -- there is going to be a penalty for not having health insurance. That penalty kicks in. That could raise your tax bill, as well.

What else is going up? Looking to buy a house? Home prices expected to rise five percent this year.

Plus, you tack onto that mortgage rates. They're going up, as well. Because the economy is getting better, the Fed isn't throwing as much money into the mortgage market. That's why those things will get more expensive.

And then are you sitting?


KOSIK: Nuts are also going to be more expensive this year.

MALVEAUX: I love almonds, my favorite snack.

KOSIK: That's on the list. Almonds, pistachios getting pricier. The USDA blaming this on a bad crop.

For the full list, go to CNNMoney. It's interesting to read these things.

MALVEAUX: Love it. It's good. Not going to cut back on the nuts, I'm telling you.

KOSIK: Love the nuts.

MALVEAUX: Thank you, Alison.

We're going to take a quick break. We've got more on an Apple settlement, huge deal, coming up next.


MALVEAUX: A developing story here, want to go to Jim Sciutto to talk a little bit about this from the D.C. bureau. This is a POW who was captured, we believe, and has been held captive in Afghanistan since 2009.

Jim, what are we learning about -- from a new video, I understand, that has been released?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: That's right, Suzanne. This is news about the only American soldier still in captivity.

The U.S. military has obtained a new video made by those holding Sergeant Bo Bergdahl, the U.S. Army prisoner of war who was taken captive in Afghanistan in June 2009 and is believed held by the Taliban-aligned Haqqani network inside Pakistan, this from a U.S. military official telling CNN.

The video, which has been described to us by this official, shows Bo in diminished health from the effects of close to five years now in captivity. The proof of life has a reference to December 14th of last year, just a month ago.

CNN has contacted Bergdahl's family, I should say, Suzanne. The military says that it keeps the family aware of developments regarding his case.

As I said, he's the only American in captivity, and this is the first video of him in nearly three years, the previous sent in February 2011. Last year, though, Bergdahl's family received a letter from him via the Red Cross.

I should note, Suzanne, we have not seen the video ourselves, but it has been described to us by an official who has seen it and given us some details.

MALVEAUX: And you say it's caused some alarm, based on his appearance. What have they learned? Do we know anything more in that description of what he looks like?

SCIUTTO: Well, I don't know if it's cause for alarm, but they have noticed, and you will have experts when these videos come out, doctors, looking at the video for science of their physical condition.

And what they have noticed in this latest video is that his condition has declined since that previous video nearly three years ago. And that's something that's worrisome.

I was not told that he looked to be on death's door, but that certainly there was a change, a marked change, from the last time they saw him in a video.

MALVEAUX: And Jim, there has certainly been an effort here to try to release him. Where is that now?

A lot of people involved. They know his name. It's a household name. What more can be done?

SCIUTTO: A lot of efforts, long efforts, frustrating efforts, for sure. There have been talks of negotiations, perhaps even the exchange of hostages for the Taliban.

Let me tell you what a Pentagon spokesman told me a short time ago on the record. Quote, "Sergeant Bo Bergdahl has been gone far too long, and we continue to call for and work for his safe and immediate release. We cannot discuss all of the details," they say, of their efforts. But they say, "there should be no doubt that on a daily basis using our military intelligence and diplomatic tools, we work to see Sergeant Bergdahl return home safely."

I can tell you, having spoken to a number of officials involved in cases like this, this is a top priority for the military, for the Pentagon. They are very focused on it. They look for any sign of intelligence as to his condition. They're making every effort. There certainly has been frustration that they haven't been able to get him home safely. And now it's coming up on five years.

And, you know, I will say, Suzanne, looking at this, there is some good news here in that, as of December, just a month ago, he was alive. This is a proof of life video. And if -- in a very sad story, if we can find some good news, that is that you have some proof that he is still alive.

MALVEAUX: Yeah. There is some sense of hope. Even just a video providing that kind of information is hopeful.

Jim, thank you so much. Appreciate that. We have another developing story out of Washington. Our Rene Marsh is telling us now that there is a huge settlement involving Apple computers refunding customers at least $32 million.

Rene, jump in the conversation here. I believe this is about kids, right, who were able to buy apps, but they didn't have their parents' consent on the phone, right?

RENE MARSH, CNN CORRESPONDENT: That's right. Whether you had an iPhone or you had an iPad, the FTC is saying they racked up quite a bill.

So what we know now, and this just happened just moments ago, Apple will pay out to consumers a refund of at least $32.5 million to settle this FTC complaint that it charged for kids in-app purchases without parents even knowing about it. Apple also says that they plan on changing their billing practices.

So what does this all mean? So Apple has an in-app purchase feature. It can be disabled. But when it is enabled, it means that you just need to put your password in once, you download that app, and for a 15-minute window, you can download as many apps as you want without having to reenter that password. FTC says that meant that children were racking up a huge bill on their parents' dime without their parents even knowing.

MALVEAUX: Yes, you know, I mean it's interesting because a lot of times, you know, parents will give their phones, you know, for kids to play with, you know, just to keep them occupied or busy, have no idea that they're hitting buttons and potentially buying things. I understand that there were tens of thousands of complaints that led to this settlement, and that you had kids who were spending anywhere from like 99-cent apps to $99, right?

MARSH: Right. You know, the FTC chairwoman, Edith Ramirez, she said that there were individual children who spent hundreds of dollars, some even spent thousands of dollars. Here she is just a moment ago.


EDITH RAMIREZ, FTC CHAIRWOMAN: In our complaint, we described stories from individual parents whose children racked up hundreds and even thousands of dollars of in-app charges. For example, one consumer reported that her daughter had spent $2,600 in the app "Tap Pet Hotel." Others reported unauthorized purchases by children totaling more than $500 in the apps "Dragon Story" and "Tiny Zoo Friends." In aggregate, we allege that there have been millions of dollars in unauthorized charges.


MARSH: All right. Well, Apple, for their part, they are saying that the FTC didn't need to get involved here. They said that they started refunding consumers last year. They look at this as double jeopardy, Suzanne.

MALVEAUX: All right. Rene, thanks. I imagine there are probably some kids who are in trouble too today, as well.


MALVEAUX: Rene, we appreciate it.

The crackdown against gays in Russia has also gotten people who are not gay in trouble. We're going to find out why this teacher is being investigated right now.


MALVEAUX: A shoot-out in southern Russia now has killed three members of Russia's security force and four militants, as well. Now this happened in Dagestan today. That is in the same part of the world, the Caucasus region, where the Winter Olympics are going to be held in just a couple of weeks. Well the shoot-out, it was part of an anti- terror operation at a home. There are big concerns, as you know, about security in Russia following two bombings on public transit that killed more than 30 people. That was in Volgograd just last month.

It is dangerous to be a gay rights activist these days in Russia because new laws now banning so-called gay propaganda. You don't even have to be gay to get in trouble. Phil Black reports that a teacher is now under investigation into whether or not her activism makes her unfit to teach children.


PHIL BLACK, CNN CORRESPONDENT (voice-over): In a country where gay rights activists are usually attacked or arrested within moments of starting a protest, you don't get many gay rights activists who are straight. This woman is one of the few. Here she's being led away by police, for nothing, she says.

Her name is Katrina Boggich (ph) and she teaches Spanish at this school in St. Petersburg. Her activism is now threatening her career because someone complained to local education authorities and her conduct is being investigated.

BLACK (on camera): So you will not change your behavior.

BLACK (voice-over): She says, "when discrimination starts in one part of society, it inevitably leads to other parts."

Boggich was inspired to act because of this man, Vitaly Milonov, an orthodox Christian, local St. Petersburg politician, and father of what's known as the gay propaganda law. Milonov became one of the most high profile politicians in the country by fighting for legislation which makes it illegal to tell children gay and straight relationships are equal.

She says, "suddenly St. Petersburg was famous as a religiously fanatical city with xenophobic authorities at the top levels of power."

We asked Milonov for his view on Boggich as an activist and teacher. He said, as a parent, he'd be concerned about what she is saying to children. But students' parents say Boggich doesn't discuss gay rights in class.

"That is her personal opinion and it has nothing to do with school," this woman says.

Russian politicians say the gay propaganda law is designed to protect children. Katrina Boggich says it's purpose is to divide society and to boost intolerance. And she says her case is just another sign that proves it's working.

BLACK (on camera): The local head of the education department says there is an investigation to determine if her activism is continuing in the classroom. But regardless of the outcome of that investigation, he's already publicly stated his personal view, which is Katrina Boggich should either stop fighting for gay rights or stop being a teacher.

Phil Black, CNN, St. Petersburg.


MALVEAUX: And this, game sweat match. How hot is it? At the Australian Open, it is so hot, players, they are now passing out on the court? Their water bottles are melting. I kid you not. That story, up next.


MALVEAUX: All right. What would you be doing outside, right, if it got to be 107 degrees? Would you actually be playing tennis for a couple hours? Hardly, right? Well, the players at the Australian Open, they have been doing just that. They're not happy about it, I'm going to tell you.

One player fainted mid match, need medical treatment, calls the conditions inhumane. Others have gotten sick and thrown up. Another watched her plastic water bottle melt on the court. That's right. Tournament officials, they could close these retractable roofs that goes over two courts. They could turn on the air conditioning, as well. They have not done that yet because they say this is simply a dry heat.

Want to bring in our meteorologist, Chad Myers.

Explain a dry heat. Why not turn on the AC? Come on, really?

CHAD MYERS, AMS METEOROLOGIST: And it's no (ph) surprise. I've looked at some of these temperatures, some of these dew points.

MALVEAUX: That was really rough.

MYERS: Here, this -- I'm not a germaphobe today, although I am every other day. If I take this alcohol and put it on a little tissue and put it on your wrist. Now blow on that. Is that cold or hot?

MALVEAUX: It's cold. MYERS: It's cold. That's what they're hoping. They're hoping that the perspiration and the air that's coming in, the little misters that they have, will get on the players' skin and it will blow it around and keep the players nice and cool. The problem is, it has to be a very dry heat for that to really work. And this hasn't been all that dry. It's going to get to 111 degrees today.

MALVEAUX: That's crazy.

MYERS: And then they're going to run around for five sets, the guys are. The girls, you know, three sets. And it's going to be really hot. And the fans aren't happy about this either.


MYERS: It's very hot. They paid a lot of money --

MALVEAUX: So what happens if you're sitting there - you're sitting there and you're watching these matches.


MALVEAUX: What's going to happen to them? They'll start melting.

MYERS: Obviously, the best thing you can do is stay hydrated. It's the same thing we talk about in America. Now, it is their summer. Our winter, their summer. Just got there. But it's only supposed to be 79 degrees. That's what the high should be. It's going to be 111. So we're not even close to just above, we're way above.

Here, let me show you what's going on here. One hundred and eleven degrees today, the low 65. Wind out of the southeast. It would be nice if the wind would blow a little bit, but this high pressure in control, like normal. So yesterday it was 109. Today's the worst day. It's a day ahead. You know, they're past the international date line.

MALVEAUX: Yes, right.

MYERS: And all the fronts move the wrong way and the winds blow the other direction because it's the southern hemisphere. But it gets much cooler by Saturday finally, when some of the big rounds come in. One hundred and eleven, 107, and then 73. So --

MALVEAUX: Wow, that's a huge dip. So this is not only a - it's a health hazard -

MYERS: It is.

MALVEAUX: But it's also a fire hazard, too, right, Chad?

MYERS: No question.

MALVEAUX: I mean things can kind of start combusting.

MYERS: There have now been many wildfires out there, bush fires, brush fires, as we would call them, out there in the bush. And, obviously, they're trying to get these contained. But now there's smoke coming into some of these cities, as well. It has been very hot and very dry. Not so much in the city. You know, Melbourne's not going to just start to burn down, but some of these areas out there where it's been dry.

MALVEAUX: All right. Well, good luck for those tennis players -

MYERS: I know.

MALVEAUX: And the folks who are out there trying to brave all that. Thank you, Chad. Appreciate it.

MYERS: You're welcome.

MALVEAUX: Several stories, photos, catching our attention today.

Want you to take a look at this. This is in South Korea. These are activists, including North Korean defectors. They launched 500,000 balloons that were filled with propaganda, and they launched them into North Korea. Now these balloons, inside they contain money, DVDs, leaflets detaining the human rights violations by the North Korean president, Kim Jong-un. And the North Korean government, they are threatening now to take action against those launches.

In India, students and soldiers, they're rehearsing for the Indian Republic Day Parade in New Delhi. The children fully dressed, you see there in their costumes, beautiful, practicing their tiger dance for the big parade. That parade will be held January 26th.

Thanks for watching AROUND THE WORLD. CNN NEWSROOM starts right now. Have is a great afternoon.


WOLF BLITZER, CNN ANCHOR: Right now, President Obama only minutes away from giving an important speech on the economy in North Carolina, but that state's Democratic senator notably absent from today's event. Has the president become a campaign liability this year.