BUSINESS-01
Level "Model 3"; Nissan Brings Micro Electric Car to New York; Anbang
Withdraws Bid For Starwood; Pamela Anderson on Aging in the Digital World;
Anderson on Cover of Last Nude Playboy Issue. Aired 4-5p ET - Part 1>
Pagliery>
Swonk, Robert Reich, Shelly Palmer>
priced at $35,000 and targeted at the entry level buyers. The new car can
travel up to 350 kilometers on a single charge and goes from 0 to 60 in
under 6 seconds. Tesla's biggest challenge will come after the car is sold.
Nissan brought their electric car to New York City and proved to be a great
attraction. The Nissan is built for getting around in the city with its
small body and 25 miles per hour speed. China's Anbang has pulled out of
the Starwood Hotel deal. Starwood Hotels and Marriott properties in New
York makes Midtown in New York the only thing you've got. Pamela Anderson
has a new movie coming out showing the raw side of growing older in a
digital world. Pamela Anderson will be on cover of "Playboy" magazine's
last nude cover.>
Movie Industry; Pamela Anderson>
[16:00:10]
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The fight against ISIL will continue to be difficult but together we are making real progress and I am absolutely confidence that we will prevail and destroy this vile organization.
As compared to ISIL's vision of death and destruction, I believe our nations together offer a hopeful vision focused on what we can build for our people. With that, what I'd like to do is ask the press to depart. We will then be showing a video that focuses attention on possible scenarios that might emerge with respect to terrorist networks. It will give us a good opportunity to test those areas where we still have work to do and how we can strengthen our collective effort against these networks. So if I could ask the press to depart promptly, please.
(END VIDEO CLIP)
RICHARD QUEST, HOST: So President Obama there chairing the final session of the Nuclear Security Summit in Washington. You've been listening to the ways in which the President has said the countries involved are all coming together. He particularly points out the Iraq agreement with the various countries as being a success following on from the promises and the commitments that were made in Prague several years ago which he said have shown when the international community works together, the benefits can be seen.
The President also there referring to ISIL and now of course briefing the other countries and the other countries telling the U.S. President what they believe is the next stage in the measures against not only nuclear nonproliferation by states but also of course the issues of terrorists attempting to acquire nuclear weapons or nuclear capabilities.
We'll talk about that in just a moment and we'll talk about what the President's nuclear summit in Washington did besides grandstanding perhaps as some people suggest.
Let's turn to our business agenda and all signs now pointing to a strong U.S. economy. The U.S. economy added 215,000 jobs in March.
(BEGIN VIDEO CLIP)
QUEST: Better than expected. An employment number ticked up slightly. It was ticked up about 5 percent but that's because more people are joining the workforce so although that has gone up, it's not seen as necessarily a negative.
Wages grew just 2.3 percent and that wage growth and the number of hours worked and the utilization rate have all been persistent problems.
Now if we take a look at the broader economy and we're seeing more encouraging data. U.S. auto sales are up sharply. Manufacturing grew for the first time in some seven months.
(END VIDEO CLIP)
Leanne Swonk is in Chicago, The Founder and Chief Executive of DS Economics and excellent to see you as always.
These numbers, OK, 215,000 or whatever, give or take, they are -- I think the best way to describe the employment numbers are respectable. I mean, they're not rip roaring and they're not dreadful, they are respectable. But taken with what we heard earlier in the week from Janet Yellen on interest rates, the dovish tone, does her comment still stand?
DIANE SWONK, FOUNDER, AND CEO, DS ECONOMICS: Absolutely. What we're seeing in these numbers is they're solid employment gains but there still is actually invalidating Janet Yellen. The increased participation in the labor force, people are actually out there, that slack that she refers to in the labor force is still there.
Many people had thought once we hit 4.9 percent unemployment, wages would accelerate rapidly. They've actually decelerated a bit from where they were in the fourth quarter, and it's because there's more people throwing their hat in the ring and actually looking for a job.
Women in particular picked up their participation in the labor force. We also saw some younger and older male workers pick up their participation. But it really has been men's participation rate in their prime age groups all the way from, say, 35 to 54, where the shortfall has been. Record lows participation rate there and that's why you're seeing the rage at the polls here in the United States as well.
QUEST: So inequality, income inequality, wage stagnation, these are all the issues that we're seeing voters rebel against. But Diane, what is now the big worry for the U.S. economy because frankly growth may be 2.5 to 3 percent, maybe you know 2 to 2.5 percent, whatever it is in the U.S. but the U.S. is motoring really rather well, so what's your big concern?
[16:05:00]
SWONK: Well certainly Yellen reflected what the concern is that China in its transition, in its slow down, it may not be as smooth transition, that you know could be really rocky for financial markets. And if China doesn't quite navigate its transition to more domestically driven demand as opposed to export, they could have a much rockier hit. In fact we saw China's bond ratings actually reduced in recent days. And I think that's important because there is concern worldwide the slowdown in China will not be as orderly as the Chinese government would like.
QUEST: OK, but that China -- we've had China on the back burner now or the front burner depending on the month for some months. But let's look at the market today and how Wall Street performed during the course of today's session.
(BEGIN VIDEO CLIP)
QUEST: I mean, we're up over 107 points. You have a bit of a hiccup in the morning and then they seem to get into their stride. Comfortably over 17,500, 18,000 on the way. So, Diane, the U.S. market seems to be shrugging off those very worries that we were concerned about before.
SWONK: And I think they're allowing Janet Yellen to bear the burden of the worries for them. I think that's the exact point, is they think the Fed can play savior here.
(END VIDEO CLIP)
SWONK: I, you know, certainly am encouraged by the fact that I do think Yellen is correct and validated that you can reengage a lot of the un and under-employed by allowing unemployment to fall lower. But let's face it, monetary policy is what we've relied on for a very long time, and it's not the only game in town. We really haven't seen any real measurable reforms at all, if anything a lack of reforms out of Washington. And structural reforms globally are what we really need to see going forward and that's not what we're seeing.
So I think that's a concern as well. We have seen central banks come out. Certainly the ECB has company out and said it that they need more fiscal policy, more fiscal reforms. And I think that's where some of the concern is. But certainly Wall Street's willing to let Janet Yellen bear those burdens as opposed to them.
QUEST: Diane, DS Economics, how good to see you, thank you for joining us.
SWONK: Good to see you too, Richard.
QUEST: Now while wage growth in the U.S. may be sluggish. Governments across the country and around the world are now raising the so call minimum wages.
(BEGIN VIDEO CLIP)
QUEST: A new law took effect in the United Kingdom on Friday. It raised the minimum -- they don't call it that, it's known as the living wage. It's a new construct from the Conservative government and it's now around $10 an hour. Over the past week, Russia's also announced similar plans. And the state of California and the state of New York, well, they are planning to raise their minimum wage within the state to $15 an hour. It's a highly controversial move.
(END VIDEO CLIP)
QUEST: The Republican party and many of those in business are vehemently against major increases to their minimum wage. So to put this in perspective I spoke to Robert Reich, the former U.S. Labor Secretary, currently a professor of public policy at the University of California at Berkeley. And I said that the rise in the minimum wage in his view, he sees it as a moral point.
ROBERT REICH, FORMER U.S. LABOR SECRETARY: Well it is certainly an economic point as well. But there is a moral undertone and foundation to the arguments. And that is that nobody should be working full time in the United States, in my view, and in the view of many other people, and yet still be impoverished. If you are playing by the game by the rules of the game, in terms of American capitalism, you should be out of poverty, your family should be out of poverty, and that requires, in most places in the country, at least $15 an hour minimum wage.
QUEST: The discrepancies, I'm just going to read you, and these are arguments that you have known and faced your entire professional life on this issue. But the Restaurant Association of California says a "dramatic wage hike will force business owners and many others to make tough choices such as cutting hours, eliminating jobs or even closing our doors."
REICH: I simply don't think that's the case. What we've seen where there have been increases in the minimum wage is that more people are drawn into the labor market which gives employers more choice of whom to hire. And that means greater employer loyalty, employee loyalty and also lower turnover. That saves employers money.
The alternative for some employers is that if everybody in the industry, if they're restaurants or if they're retailers, it doesn't matter, if all their competitors are facing the same increase in the minimum wage, they suffer no competitive injury themselves and they simply pass on the increase to consumers.
So either the minimum wage is going to be absorbed and save employers money in terms of employee loyalty and less turnover, or to the extent that it doesn't, it's going to be passed on to consumers.
QUEST: And yet those who are against it still says -- described the minimum wage as a tax on jobs that to those who may receive it, there may be benefit. But we will never really know how many hours were cut or how many jobs were not created because of it.
[16:10:14]
REICH: Well, that's been the case since 1938 when the minimum wage was officially created in the United States. Every time it's been raised, usually, inflation has cut into its value, the restaurant owners or the fast food or the restaurant -- other restaurant or the retailers say no, you must not do this, because it's going to cost jobs. The history of the minimum wage in this country is that it has not cost jobs, it has actually put more money into the hands of people who are going to spend that money. And the spending of that money by lower-income people actually has the effect of multiplying the number of jobs in a local area. And so most of the arguments, in fact, all of the arguments to date against increasing the minimum wage have been proven absolutely wrong.
QUEST: Robert Reich, joining me on the line from Berkeley.
All the signs point to one company being behind the Apple iPhone hack. Remember, we're talking now about the company that managed to hack into the Apple phone. It's an Israeli firm it's called Cellebrite and is believed to have helped the FBI get into the terrorist's phone. After the break.
(COMMERCIAL BREAK)
QUEST: An Israeli company is believed to be behind the hacking of a San Bernardino terrorist's iPhone. A source has confirmed to CNN money that an elite group of engineers from the firm Cellebrite helped the FBI.
Now that name, Cellebrite, came up when interviewed the Cyber Security Expert John McAfee on this program on Tuesday.
JOHN MCAFEE, CYBERSECURITY EXPERT: It's an Israeli company called Cellebrite. They've had a contract with the FBI since 2013 really and they have a mobile forensics division which creates a device that -- about this big that you can plug a phone into, any phone, and they will, in fact, decrypt it.
QUEST: U.S. Government records show that Cellebrite landed its biggest contract ever with the FBI on the very same day the bureau announced it had successfully hacked Sayeed Farook's iPhone. Is it a connection, is it a coincidence? Most probably not. So we sent CNN'S Oren Leibermann, to take a look at Cellebrite.
(BEGIN VIDEO CLIP)
OREN LEIBERMANN, CNN CORRESPONDENT: Four months after the terrorist attack, the iPhone remained a critical but inaccessible piece of evidence. An ugly legal battle between the FBI and Apple suddenly ended when the FBI found a different way to get into the iPhone. An Israeli newspaper citing industry sources said the company that did the work was called Cellebrite.
Cellebrite's offices are here behind me in this high-tech park just outside of Tel Aviv. Now neither the FBI nor Cellebrite will comment on the company's involvement but Cellebrite specializes in mobile division data extraction and decryption, phone hacking. And that's exactly what the FBI needed in this case.
We reached out to Cellebrite and the FBI repeatedly. Cellebrite didn't return our calls. And the FBI wouldn't comment about the company. The FBI has said only that used a "outside company" but the FBI signed a $200,000 contract with Cellebrite the same day the FBI announced it had gained access to the content in the shooter's phone.
[16:15:08]
LEIBERMANN: Shares of Cellebrite's parent company soared. At a tech conference in 2014, Cellebrite's forensics technical director, Yuval Ben- Moshe, told CNN about the work.
YUVAL BEN-MOSHE, CELLEBRITE'S FORENSIC TECHICAL DIRECTOR: We allow -- law enforcement a very deep and detailed access to a lot of information that is on the mobile device and then it allows them to deduct who did what when. Which is the essence of any investigation when you look at it.
LEIBERMANN: Cellebrite's technology isn't just a hack on the iPhone. Critics say it's a hack on privacy. Ben-Moshe says his company has been challenged in court.
BEN-MOSHE: You've got to make sure that whatever you bring into court can stand there and can stand any cross-examination. There are very, very strict rules, the guidelines with most of the countries, and we meet those. We meet those to the best of our knowledge.
LEIBERMANN: To learn more about mobile device security, we meet Michael Shaylov. He is a mobile technology expert at Checkpoint, an Israeli cyber security phone. What are the weak points of an iPhone or any other mobile device that you can access the phone through?
MICHAEL SHAULOV, CHECK POINT SOFTWARE TECHNOLOGIES: When you connect the cable to the phone, then you can abuse all kind of protocols that the iPhone can communicate with the laptops and then using by hijacking or manipulating those protocols, you can actually unlock the phone.
LEIBERMANN: If I give you my iPhone, if I hand it to you, how long will it take you to hack this iPhone?
SHAULOV: It will probably take me, faster to hack your phone when it's actually in your hands rather than when you give me the phone. It's much easier to conduct a social engineering attack, basically to send you something that you will click on and you will install something on your phone rather than I will try to actually guess or break your pass code.
LEIBERMANN: This is the flip side in the startup nation, innovation used to build security now used to exploit vulnerabilities.
Is Cellebrite the company behind the U.S. government's iPhone hack? They will not say. But notably the company that signed the FBI contract and was enthusiastically touting its technology not long ago, has now gone silent.
Oren Leibermann, CNN, Tel Aviv.
(END VIDEO CLIP)
QUEST: Did Cellebrite do the deed? Jose Pagliery, is CNN Moneys cyber security correspondent. You've got plenty of work to keep you busy at the moment.
JOSE PAGLIERY, CNN MONEY'S CYBER SECURITY CORRESPONDENT: Yes, I do. So let's talk about it because there are conflicting reports. I talked to two people who were in direct contact with a team at Cellebrite, including who they say was a genius, brilliant engineer in Seattle who pulled this off for the FBI.
(BEGIN VIDEO CLIP)
PAGLIERY: They told me absolutely it's Cellebrite. And again, now we've got two anonymous law enforcement sources telling CNN absolutely it's not Cellebrite. Cellebrite's staying quiet. The government won't go on the record.
QUEST: If it's not -- look, it's a relatively small world, the cyber security world, as I understand it. If it's not Cellebrite, then it will be an eye-raising opener if it's somebody that nobody else -- because that's the only name I've heard people talk about.
PAGLIERY: Well, let's just look at the evidence we've got. For the last seven years, Cellebrite has been the FBI's go to phone unlocker, all right, they make this device, this handheld device --
QUEST: Yes, what does it do?
PAGLIERY: Well, this is really interesting. So let's talk about who Cellebrite is. Right?
QUEST: (inaudible)
PAGLIERY: So they have this device that just plugs into your iPhone. Boom, you plug it in and it cracks into that phone and extracts all of the data on that phone. So anything that's on here deleted text messages, deleted pictures, anything you thought you were through with, it's theirs. It's theirs. And so they have perfected this over the years. Now, this would have been a huge challenge for them. Because Apple made it so that their phone could not be cracked. If they're the ones who did it, they did something incredible.
QUEST: But it's something to do with the chip isn't it and cloning the chip and going backwards and forwards.
PAGLIERY: it's - Cellebrite got started as a company that would make a device that would move data from one phone to another. So they've understood how phones store data and how they protect it since day one.
QUEST: So if Apple is now, we're on the 6, whatever it is --
PAGLIERY: IPhone 6-s.
QUEST: Well, maybe for you all but not me. Apple's on the 6 and the 7 is next or whatever. And the goal is constantly an unbreakable phone.
PAGLIERY: That's the goal.
QUEST: You think it can't be done?
PAGLIERY: Well, it's really -- anything can be broken. It's an arms race. It's always and arms race. It's like the 1930s when you had police using pistols and then criminals came in with machine guns so police started using machine guns. That's how it is in the computer world, you try to make an unbreakable device and the FBI and criminals will try to figure out how to break in. The FBI to solve crimes, the criminals to commit them.
QUEST: Right, and the FBI of course, and I mean, Apple has to actually handle the question when people - and I've asked you this before, when people say to Apple, you know why are you making a phone that law enforcement can't get into?
PAGLIERY: They're making a phone that no one can get into to protect privacy.
QUEST: Yes, but they have a public duty surely as well.
[16:20:00]
PAGLIERY: What they -- well, wait a minute what phones are FBI agents using? I'm pretty sure that they want an unbreakable phone, right? And so the question is can a company try to make the best secure product possible? That's Apple's job. The FBI job is they've got to solve crimes, they're going to try to break in. This is one instant that shows that well, they pulled it off.
QUEST: Is it Cellebrite?
PAGLIERY: There are a lot of indications it was.
QUEST: Have a good weekend, sir.
PAGLIERY: Thank you.
QUEST: The issues that Apple is dealing with today are very different. Public policy in that sense to what they had to deal with in 1976.
(BEGIN VIDEO CLIP)
QUEST: Oh, look at this. 1976. 40 years ago today, Steve Jobs, Steve Wozniak and Ronald Wayne founded Apple. So let's look at the evolution of tech giant through its products.
Now Apple was - in 1976 this was the original. Just look at the board, the keyboard and the monitor.
Go to '84 and you're starting to see style, elegance, a certain sophistication. Those of us of a certain age will recognize the original Mac in 1984. Then in 1998, you move forward to the i-Mac. And that's the first time perhaps that we're seeing ting the "i" coming up once truly into the Apple products.
By the time you get to the 21st century, things are very different. You are now seeing style, you're seeing substance, you're seeing form. You've got the iPod which comes along in 2001. And then the iPad.
The iPad of course is revolutionary. Because in 2010, I beg you -- the iPhone first of all in 2007 and then the iPad. Because the iPad is somewhat revolutionary as a completely new device.
The iPad gave us something the table, that we didn't even know we needed or even wanted. And possibly some would say the iWatch or the Apple Watch as it is in 2015 is doing the same. But it hasn't had anything like the same take-up as the other ones.
John Sculley was the Chief Executive of Apple. He was there for a decade from 1983. And look at the photo of him back then in the middle with the co-founders of Jobs and Woziak. Now, he's now a partner at Sculley Advisors. Eleni Giokos said when he spoke the current CEO is handling the iPhone hacking case well.
JOHN SCULLEY, FORMER APPLE CEO: Well, I think Tim Cook has been just brilliant in how he's handled that situation. You know CEOs sometimes have major crises that they never plan to have to deal with. But Tim handled this one with brilliance. I think everyone in the tech industry admires the, you know, careful moderated way which he handled this issue. It was in the best interest of Apple, the tech industry, and I think the whole country. And it's so far had a good outcome for everyone, including the government. And I think that encryption and security, privacy, is going to continue to be an issue because hackers only get better and then security and privacy technology has to get better too. So, this is not a story that's over but Tim's done a terrific job so far.
ELENI GIOKOS, CNN CORRESPONDENT: John, what is your prognosis on the way that this could develop? Is it something you're watching on the sidelines and are pretty much concerned about?
SCULLEY: Well, I think it's an issue that is going to be with us for many, many years. That's why I think Tim Cook said, you know, we've got to get more clarity. Which may mean new laws from congress, it may mean these laws being tested by the Supreme Court. That obviously takes a period of time. So the fact we have this intermission in the fact that the government has said we have a solution that doesn't require Apple, I think it gives us, you know, sometime, maybe several years, to be able to sort those issues out and get the precedent law.
But I think right now, imagine how the Chinese would feel if they knew that the FBI had a back door into the iPhone and this is Apple's largest market in the world. So it has huge ramifications beyond societal issues, it has huge implications for the whole tech industry.
GIOKOS: So John, watching, you know, the future of Apple, there's so much innovation out there, there's you know, just so much competition. Do you think that we've seen and hit perhaps a glass ceiling when it comes to innovation? And where do you see Apple fitting into the greater scheme of things?
SCULLEY: No, I have a very optimistic view for Apple. I think the leadership's been clear at Apple that they are trying to be the first, they're trying to be the best, it's always about user experience.
So take something like a virtual reality. Obviously there's some other companies that were out there first. Facebook is a good example of that. Samsung's another example of that. So is Sony. But my bet is it will play out much the way the iPod did. Apple wasn't the first one with an mp3 player but they were the first one in to figure out an experience and to figure out iTunes as a way to reconceptualize music. And I believe that Apple will be a big player in VR at the right time but they're always about best user experience, focus on beautiful design, no compromises and I don't expect they'll change that at all.
(END VIDEO CLIP)
[16:25:20]
QUEST: John Sculley. There have been few laughs for Google's April fool's joke. The tech company designed a feature that was designed to end these never ending e-mail chains. It attached a gif of an angry minion dropping a microphone.
(BEGIN VIDEO CLIP)
QUEST: There you are, there you see it. Now here it is, it's meant to effectively shut down any conversation. When you drop the mic, that's the end of it. But it placed the button for the mic drop option next to the regular send button on Google mail, or Gmail. It angered some after a number of people accidentally clicked the wrong button while sending professional e-mails.
One twitter said, "note to self don't send anything important in G-Mail today because of the stupid mic drop button." Google recognized the problem, shut it down and said, "well, it looked like we pranked ourselves this year. Due to a bug, the mic drop feature inadvertent caused more headaches than laughs. We're truly sorry."
Shelly Palmer is here. You're laughing.
(END VIDEO CLIP)
SHELLY PALMER, HOST, SHELLY PALMER DIGITAL LIVING: I am. But no, Google really made a gigantic mistake. And whatever the intention was, the consequences were clearly unintended. What happened was, as you described, you'd send an e-mail and if you inadvertently hit the mic drop send button as opposed to the regular send button, they were next to one another, then you finished your communication and this little minion comes out, drops the mic, and the person who you sent it to couldn't respond to you. It was over. The conversation was over. So some people claim they lost their job. They sent - they were unable to -- they sent stuff in on deadline and were unable to communicate back and forth with their colleagues about whether the messages have been received. Google really got themselves in some hot water today.
QUEST: Why is this different to say Microsoft's Tay debacle? In the sense they're both sort of unintended mistakes. You know, what to you is the difference?
PALMER: I think there's a huge difference. One is an experiment about -- that's set up to be an experiment. It's an artificial intelligence thing. They came out and say we're making -- we're trying this and it got pranked and it didn't -- it said a lot about society. But it didn't say much about Microsoft.
This is April fool's day. Google is notorious for awesome April fool's day pranks. This was -
QUEST: So they got this wrong?
PALMER: And this is just a bad idea that didn't go right. This was very well intentioned and really poorly executed. And it hurt a lot of people. So yes, they're pretty different.
QUEST: You do wonder what - I mean we don't really know whether or not it was intended to stop future e-mails or just sort of meant to be just a -we don't know. But anything that could potentially interfere with somebody's ability to do their whatever is a bad idea.
PALMER: Look, I'll tell you what it tells us. It tells us that we are woefully, horrifyingly addicted to e-mail communication. G-mail.
QUEST: You speak to yourself!
PALMER: Critically important -
QUEST: You speak for yourself Mr. Palmer -
PALMER: critically important and when someone inhabits our ability to communicate, we don't have a sense of humor about ourselves. And truthfully, business communication shouldn't be pranked and Google should have known better, shame on them. But they apologized.