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Massive Worldwide Sting on Hackers; Chinese Officials Accused of Cyber Espionage; Does AT&T and DirecTV Merger Mean Higher Prices?; MERS Cases Spread in U.S.; Jill Abramson Controversy

Aired May 19, 2014 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CAROL COSTELLO, CNN ANCHOR: NEWSROOM starts now.

ANNOUNCER: This is CNN breaking news.

COSTELLO: Morning. I'm Carol Costello. Thank you so much for joining me. We do begin with breaking news this morning. In a massive worldwide string, the FBI swooped in on hundreds of hackers accused of gaining control of your home computer and secretly snapping pictures of you without your knowledge.

You might remember the story of Cassidy Wolf, Miss Teen USA -- a hacker got control of her webcam, snapped nude photos of her in her bedroom. She had absolutely no idea this was happening. And then the perpetrators threatened to put those photos online.

(BEGIN VIDEO CLIP)

CASSIDY WOLF, MISS TEEN USA: I dropped my phone and I was screaming. I was on the phone with my mom and we were both crying. I really -- I couldn't explain the emotion I was going through. It was terrifying, absolutely terrifying.

(END VIDEO CLIP)

COSTELLO: It is a story you'll see first on CNN. CNN justice reporter Evan Perez breaking down the developments. And Shawn Henry, who is former assistant director of the FBI will break down the investigation. He's also the president of CrowdStrike Services, a company on the frontline of fighting cybercrime.

Evan, first up to you. Tell us more about this crackdown. Who is responsible?

EVAN PEREZ, CNN JUSTICE REPORTER: Well, Carol, the FBI and police in over a dozen countries have been working on this case for a couple years now, and they basically in the last few days have done a roundup. Over 100 arrests have been done; hundreds of searches have been done in Europe, Canada and the United States. And we're going to hear more about this later today, the Justice Department, the U.S. Attorney here in Manhattan, is going to announce charges against some of these individuals.

Now, what we're talking about is black shades, which is a type of malicious software, the kind that was used against the former Miss Teen USA. It basically is used to hijack your computers. It can be done -- it can do everything from log your key strokes so they can steal your bank account information, your passwords. It can turn on your webcam. And it's been used for everything from bank fraud to extortion, Carol.

COSTELLO: So Shawn, I want to ask you about this device that these perpetrators install on your computer. Is it relatively easy?

SHAWN HENRY, PRESIDENT, CROWDSTRIKE SERVICES: It's actually very, very easy. This is what we would call commodity software; it's actually point and click. You can download it from the Internet. You do not have to have any particular type of technical skills.

Once you've got what we call this remote access tool, once you've got it on your computer as an adversary and you deploy it, you have a screen and you can actually click on the camera of the computers it's installed on. You can actually read the key strokes as these people type in their user names and passwords or where they're constructing e-mail. Very easy to use, very easy to deploy, and incredibly pervasive throughout the network.

COSTELLO: OK, and let me guess. You can buy it online, right?

HENRY: You certainly can, for about 50 bucks.

COSTELLO: That's just insane. So, Evan, who are these people? Some in the United States and some are in Europe, is that correct?

PEREZ: That's right, Carol. We expect the FBI and U.S. Attorney here in Manhattan will announce that they've arrested not only some of the cyber criminals that are using this software to hack into people's computers, but also some of the people who have been behind it. That's been an elusive thing for the last couple years.

Now, last week, CNN was allowed into the FBI's command center to take a look as they were trying to bring this operation down. We're going to have some more about that later this morning, but it is something that they've been working on for a long time, simply because they believe that several hundred thousand computers around the world are infected with this malicious software, Carol.

COSTELLO: OK, Shawn, last question for you. How difficult was it for the FBI to round up all these people?

HENRY: This is a great example of international coordination. The FBI has a long, proud history of working collaboratively with law enforcement agencies around the world. To do attribution in these cases is oftentimes difficult because you've got to identify not only the computer being used but also the person behind the keyboard. It really requires this coordination, collaboration. Kudos to the FBI and law enforcement elsewhere globally.

COSTELLO: Absolutely. Evan Perez, Shawn Henry, thanks so much.

Cyber spying is also making news on the global stage as the U.S. files its first ever charges against officials in China's government. All five of these Chinese officials are military officers; they're accused of hacking into U.S. companies to steal trade secrets, a problem the United States believes is both widespread and worrisome. Attorney General Eric Holder will reveal more at the top of the hour.

But let's get the latest from justice correspondent Pamela Brown. I know you're working your sources this morning. What can you tell us, Pamela?

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Good morning to you, Carol. That's right; it's called economic espionage. And sources we've been speaking with, Carol, say that it is an epidemic. It's a problem that is rampant, but it's the first time that the U.S. has brought charges against state -- Chinese state officials.

So what we have learned, Carol, is that the U.S. Department of Justice is filing charges against five Chinese military officials essentially for hacking into U.S. companies and stealing trade secrets. We're talking about companies and trade unions and manufacturing, as well as steel companies. And this investigation, Carol, has been going on for several years. We've been told by officials they've suspected for a while that the Chinese government was behind this, but it's the first time that we're really seeing those words accusing China of hacking put into action with these charges filed this morning. Carol?

COSTELLO: So let's be realistic, though. The U.S. has filed charges against Chinese officials in China. So what really will come of that?

BROWN: Yes. So, speaking to sources, Carol, they're saying the idea of China extraditing these officials, these military officials, are slim to none. They're not going to do that. They're not going to appear in a U.S. courtroom to face these charges.

But basically this is just sending a strong statement to China. Like I said, they're putting the gauntlet down on China and saying, look, we know what you're doing. We've been talking about it; we heard President Obama talking about it, saying, look, China, we know what you're up to. But now this is the first time that they're really taking action, putting those words into action, walking the talk and sending a strong message.

And there could be implications. There's a lot at play here; there's the diplomatic angle, there's policy, there's politics. But essentially the U.S. government officials built enough evidence over the years to bring forth these charges and send this signal.

COSTELLO: OK, we'll see what happens. Pamela Brown reporting live from Washington this morning.

Log on, tune in, pay up. AT&T wants to buy DirecTV, the nation's biggest satellite TV provider. And their promises are almost as big as the $48 billion price tag. The new mega giant, they say, could take TV and wireless to the next level, whatever that means. For example, you could soon watch the same things in your car as in your living room. Right away, AT&T say it is new giant will give consumers one-stop shopping for phone, TV and Internet service. That means we could bundle services from a single provider.

But consumer advocates say less competition will drive up prices for all of those things we see now as essential. Christine Romans breaks it down for us.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT (voice-over): Nearly $50 billion. That's the hefty price tag AT&T agreed to pay for DirecTV. America's largest satellite TV provider, this deal, just the latest in a wave of media consolidation. Comcast revealed its plans to buy Time Warner Cable for $45 billion in February. And Sprint's parent company, Soft Bank has been expressing its interest in sealing a deal with T-Mobile. The inevitable concern these new Internet and video powerhouses could take more control over your screens. All of them.

MICHAEL WEINBERG, VICE PRESIDENT, PUBLIC KNOWLEDGE: With that consolidation and reduction in competition, we see fewer things happening and prices mostly going up for consumers and subscribers.

ROMANS: Potentially good for consumers, AT&T and DirecTV said the acquisition could mean new bundles that would bring TV and Internet options across all of your screens even those in cars and airplanes. The fate of the new alliance rest in the hands of the FCC.

SEN. AL FRANKEN (D), MINNESOTA: There is a proper role for the Department of Justice to look at this as an antitrust matter and for the FCC to look at this and ask, is it in the public interest? And I say, no, it isn't in the public interest and, yes, this is a violation of antitrust.

(END VIDEOTAPE)

COSTELLO: Christine Romans is here right now along with Matt Wood, the policy director at the public interest group, Free Press. There he is. Hi Matt.

Christine, I want to start with you. You know my prediction -- soon there will only be four big companies in all of the United States. That can't be a good thing.

ROMANS (on camera): No, that's what consumer groups have been saying. They say, look, we think that when there are fewer players, that means fewer choices for consumers. Now, others, though, who follow these companies, say if you have the situation where Comcast is in brutal competition with AT&T -- remember that other big deal announced earlier this year is Comcast -- that maybe that could be good for consumers.

What I can tell you for DirecTV customers, Carol, nothing will change for three years. That's what AT&T tells us. Their pricing will stay the same. Nothing changes for them. For AT&T users, what the company says you would be more easily be able to have these packaged TV and Internet bundles, more choice on what your package from AT&T can look like. But the big question is do fewer choices mean higher price? Prices have been rising. We use more media, we use it differently, we use it on a lot of different screens -- that is not going away. We want it fast. We want it available on demand. And this is what we've been seeing for TV costs, the pay TV part of things so far. No question -- prices are not going to go down, Carol. Does this merger make it worse?

COSTELLO: Matt, why do companies always tell us that it will be good for the consumer when they know it won't?

MATT WOOD, POLICY DIRECTOR, FREE PRESS : What's funny, they always tell a different story in Washington than what they say on Wall Street. Here it's about how hard it is for them to compete and up in New York it's about how much money this will make them. I think the competition is often brutal, that's true, but it's usually brutal for people like you and me who have to pay for these services, not for the big companies who make these promises and almost never deliver on them.

COSTELLO: If they wanted to help the consumer gain faster Internet service and to make everything equal, why not install fiber optic lines all over the United States instead of entering into these big mergers?

WOOD: Exactly. We've been playing that out for a while. And this one really seals the deal. Between this one and the Comcast-Time Warner Cable merger, you could see the entire company wired with gigabit fiber speeds. And what they're doing instead is they're paying all this money to take out their competition. It makes Wall Street happy; it makes their shareholders happy, perhaps. But the rest of us should not be smiling about this because it will mean fewer choices and higher prices.

COSTELLO: So, Christine, is this a done deal?

ROMANS: It's not a done deal, Carol. I mean, they have to go in front of regulators here.

Now, I think you can assume that they have really done their homework, that they've tried to lay out a bunch of conditions that they say they will meet, like for example getting broadband to 15 million rural households, that's something the Obama administration has wanted; like keeping things the same for DirecTV customers for three years. I mean, you don't take a deal like this public and you don't take a deal like this to Washington until you've done an awful lot of work and you think you can get it through.

Ironically, some people this morning are saying this deal might make the Comcast-Time Warner Cable deal -- might grease the skids a little bit for that, that happened earlier this year. So a lot happening in this space. But I'm telling you, Carol, it is very competitive out there and they feel like they have to innovate or die. In the interim, at least then they're coupling up.

COSTELLO: Christine Romans, Matt Wood, thanks for the insight. I appreciate it.

Still to come in the NEWSROOM, a deadly respiratory virus now spreading in United States and it has some serious and scary implications. Senior medical correspondent Elizabeth Cohen is on that story this morning. Good morning.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Good morning, Carol. Carol, it's not just scary that it's spreading; it's how it's spreading. I'll have more after the break.

(COMMERCIAL BREAK)

COSTELLO: Checking some top stories for you at 15 minutes past the hour.

This morning, firefighters in San Diego might finally be getting the upper hand on a rash of deadly wildfires that swallowed up dozens of homes and businesses. Some 26,000 acres have burned, but Governor Brown is warning that California's wildfire season has only just begun, and the drought-stricken state has a long and dangerous summer ahead.

South Korea's president is dismantling the nation's coast guard in wake of the ferry disaster that killed some 300 people, most of whom were high school students. In a tearful and emotional apology, President Park Geun-hye took the ultimate responsibility for the family's pain and suffering, but she slammed the coast guard for its role in the disaster, saying it, quote, "failed in its duty to carry out the rescue operation."

It may be where dreams come true, but only if you've got the cash. According to "The Los Angeles Times," California's Disneyland, aka the happiest place on earth, raised ticket prices without notice this weekend. Get this, for anyone 10 years and up, it will now cost you $96 for a one-day pass. That's up from $92. Parking also went up a buck to $17. The price of a ticket four years ago, $72. And when the theme park opened in the summer of 1955, it cost $1.00 to get in. Wow.

For the first time, an American attracted (ph) the MERS virus without setting foot in Saudi Arabia. Three people have tested positive for the Middle Eastern Respiratory Syndrome. In this latest case, an Illinois man got it after meeting a man from Indiana. That Indiana man diagnosed just a few days later. Senior medical correspondent Elizabeth Cohen is tracking it all.

And what I meant to say, these two men just exchanged a handshake and the man who was not infected got it from just shaking the hand of the man who was.

COHEN: Well, actually, Carol, we're not exactly sure how he got it. It may have been from a handshake, or more than one handshake. It may have been because they were sitting near each other and droplets from his mouth or nose got to the other man. We just don't know.

But getting MERS from a meeting is a bit different - or actually, I should say, quite different from the previous two cases of MERS in this country.

(BEGIN VIDEOTAPE)

COHEN (voice-over): The first two cases in the United States were people who got infected in Saudi Arabia and then got on a plane and came here. Those cases were reported in Indiana and Florida. Now health officials say an Illinois man, who had a business meeting with the Indiana patient, has also tested positive for MERS.

LAMAR HASBROUCK, ILLINOIS DEPT. OF PUBLIC HEALTH: This potential person that was - that is maybe the third case that was transmitted, had just basically business transactions with the individual. So no unique travel history of their own and then no travel history since.

COHEN: The CDC says during a meeting on April 25th, the two men were sitting within six feet of each other talking. The only physical contact they had was shaking hands. The next day they had another meeting, this one shorter. This was a week before the Indiana patient was confirmed to have MERS.

A CDC doctor says the Illinois man was never really sick, but now the CDC wants to test people he came in contact with, because even without symptoms, it's possible he could have spread the deadly MERS virus.

(END VIDEOTAPE)

COHEN: Now health officials have been talking about the kind of close and prolonged contact that you need to spread MERS. And they've been talking about family members living with other, for example. But this, clearly, is a little bit different. Just two people having a meeting together. And so it certainly makes you wonder, is it easier to spread this virus than was previously thought?

However, it is important to note, this Illinois man didn't get sick. So maybe this disease is perhaps a bit less deadly than we thought.

Carol.

COSTELLO: Yes, but he didn't get sick, but he still might be contagious, which is a little freaky to me, Elizabeth.

COHEN: Right. That is true. And so that's one thing that - that's something that the CDC is really going to follow. Are there - is there a group of people out there who aren't getting sick but who can get other people sick? And, Carol, this disease is so new to this country, it just arrived in Indiana just a few weeks ago. In Florida, even more recently. There is so much that they don't know about this virus and they're really still learning exactly who can transmit, who can't, how easy is it to get sick from this virus.

COSTELLO: Elizabeth Cohen reporting live from Atlanta, thanks so much.

COHEN: Thanks.

COSTELLO: Still to come in the NEWSROOM, just days after "The New York Times" executive editor Jill Abramson was abruptly fired, she is set to deliver the commencement speech at Wake Forest University. So, what will she tell the graduates? We'll talk about that, next.

(COMMERCIAL BREAK)

COSTELLO: The morning, the former fired executive editor of "The New York Times," Jill Abramson, will make her first public appearance since her controversial firing last week. You're about to look at live pictures from Wake Forest University where any minute now Abramson is set to take the stage and deliver today's commencement address.

This as "The Times" pushes back against claims sexism fueled Abramsom's firing. In a scathing statement, the publisher of "The New York Times," Arthur Sulzberger writes, quote, "during her tenure, I heard repeatedly from her newsroom colleagues, women and men, about a series of issues, including arbitrary decision making, a failure to consult and bring colleagues with her, inadequate communication and the public mistreatment of colleagues," end quote. But critics say Abramson was given the ax because she confronted top brass after finding out her male predecessor made more money. There you can see her going to the stage now at Wake Forest. Her daughter actually posted this photo to Instagram over the weekend. It shows Abramson looking tough, wearing a pair of boxing gloves with this caption, mom's bad ass new hobby, #girls, #pushy. Let's bring in CNN's Alexandra Field and Brian Stelter.

Alexandra, did Abramson consider backing out of this address?

ALEXANDRA FIELD, CNN CORRESPONDENT: Well, Carol, Abramson was actually set to receive an honorary degree from Brand Ice (ph) University over the weekend. She skipped that. But today she has the microphone and I don't think that most people expected her would give that up. Look, this is a commencement speech. It's an opportunity to share your point of view uninterrupted. And this is a woman who clearly has plenty to say.

Look, do I expect that she will discuss in explicit detail her departure from "The New York Times"? I would doubt it. But the job of a commencement speaker is really to empower the graduates. And I think we'll see her do that by both hitting on some of the idealism and optimism that she might maintain at this point, as well as by showing the graduates a peek at some of the realities she confronted on her way to the top and maybe on her way out too.

COSTELLO: Right. I'm just looking at the live pictures. Those are their professor making their way to the stage. They'll sit down. Abramson's probably already on the stage. And then they'll give out those honorary degrees.

Brian, I would be stunned if Abramson said anything overt because I think she'll sue. Do you?

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: I asked Ken Oletta (ph) that yesterday on "Reliable Sources." He was the one that first wrote about this issue of unequal pay between Abramson and her predecessor, Bill Keller. "The New York Times" then said their packages -- their pay packages were basically equal when it all gets sorted out. Ken Oletta said he thinks it is possible that she could sue and that Abramson's friends have talked about that possibility. I think today she'll take the high road. She'll make a couple of clever remarks about this. You know, it's kind of fun to even be looking at this commencement address. These students had no idea a week ago that they were going to be on national television. I noticed on Twitter there was a picture of the - you know, the printed agenda for the day. They did update it. it now says, former executive editor. So, they're on top if it down there at Wake Forest.

COSTELLO: OK. We're looking at Jill Abramson now. She's making her way to the stage, actually, along with those professors.

Alex, young women who are graduating today, what will be the takeaway for them, you think?

FIELD: This is certainly going to be a really interesting speech for them. A really interesting speaker. Look, Jill Abramson was celebrated because she rose to the top of her field, the first executive editor of "The New York Times." That's a really big deal because when we're looking at that level of journalism, look, it's a level that is dominated by men. But the graduates out there, they might be thinking more about the ground level of the field. And I think that when they listen to Abramson, they're also going to be considering some realities, which is that as they enter the field of journalism, they may very well confront some disparities themselves.

Look, the Pew Research Center points out that men in journalism are still out earning their female counterpart. They used 2012 data that's pretty recent to show that men - that women are earning only about 83 percent of what male journalists are earning. So that is the reality. Jill Abramson is someone for them to look at. She is a woman who had tremendous success in this field. Whatever the reasons that surrounded her departure, I think the young women will certainly want to focus on some of the successes that she did have on her way to the top.

COSTELLO: All right. And I would only say, Brian, that I think this is -- there is widespread interest, and not just in the field of journalism. I mean by objective standards, Abramson did a great job. The paper won a Pulitzer, sign-ups for digital access increased, the company's stock doubled, yet she was fired for being mercurial. I think more than one working woman in any field can relate to this.

STELTER: She was one of the most powerful women in media. And because the media is so influential, one of the most powerful women in the country. "The Times" sets the agenda for newsrooms all across the county and the editor in chief sets the agenda for "The Times." And so she held a very important, very powerful job. But she did have a number of weaknesses as well as strengths. We all do. And in her case, it was her weaknesses that were eventually her downfall at "The Times." It's not the end of her, though. I imagine there are many, many offers or interests from other employers that she's already fielding.

COSTELLO: All right, Brian Stelter, Alexandra Field, many thanks.

Checking other top stories for you this morning at 29 minutes past.

The Department of Justice has filed criminal charges against five Chinese military officials. They're accused of cyber spying on U.S. companies. It is the first time the United States has filed such charges. The officials are accused of stealing trade secrets from a number of those U.S. companies.

AT&T set to acquire the nation's largest satellite TV provider, DirecTV, for nearly $50 billion. If approved, AT&T/DirecTV would be the country's number one television provider behind Comcast. AT&T's CEO says the merger would create new ways to deliver content through mobile devices, TVs, laptops and even cars.