Tech giants call for controls on gov't snooping

LONDON — Major technology companies, stung by revelations that the U.S. government collects people's personal data on their networks, on Monday issued an open letter to President Barack Obama asking for tighter controls on surveillance.

As part of a global campaign to reform data collection, Google, Facebook, Apple and others said concerns over national security should be weighed against individual rights.

"The balance in many countries has tipped too far in favor of the state and away from the rights of the individual — rights that are enshrined in our Constitution," the letter said. "This undermines the freedoms we all cherish. It's time for a change."

The letter follows this summer's disclosures by former National Security Agency contractor Edward Snowden, who leaked details of the secret programs that critics argue violate privacy rights. Intelligence officials say the NSA's tactics have helped disrupt terror attacks. Officials also insist that the agency takes care not to look at the content of conversations or messages by U.S. citizens.

The letter is the latest salvo from the Big Tech companies in a campaign to counter any perception that they voluntarily give the government access to users' email and other sensitive information. The stakes are high: The companies depend on the trust of legions of online users who attract digital advertising — the online industry's lifeblood.

A similar group of companies signed an Oct. 31 letter to senior lawmakers supporting proposals in Congress that would provide more transparency about the national security orders under which online companies must provide data to the government. By addressing Obama directly this time, the companies may be able to draw greater public notice.

It was a shrewd move for the companies to disseminate the open letter through newspaper ads, said Daniel Castro, a senior analyst for the Information Technology and Innovation Foundation, a Washington, D.C. think tank.

By virtue of connecting directly with a massive proportion of the U.S. population, the companies "have a huge reach," Castro said. "They want people to be supporting and rallying around this effort."

The Silicon Valley companies also are waging an attack in the Foreign Intelligence Surveillance Court, where they are fighting to be allowed to reveal more details about how frequently the NSA has been seeking user data. U.S. law currently prevents the recipients of national security orders from breaking down the number of demands they get under the Patriot Act. The companies contend that restriction fuels the erroneous perception that the government has a direct pipeline to their users' data.

The technology companies argue that officials should codify "sensible limitations on their ability to compel service providers to disclose user data" and to ensure that law enforcement and intelligence efforts should be transparent and accountable. It makes an appeal for respecting the free flow of information across borders, describing it as "essential to a robust 21st century global economy."

Though the campaign is directed internationally, a letter on its website and published in U.S. newspapers struck at the United States government, whose surveillance methods have attracted particular scrutiny. CEOs and senior leaders of the companies weighed in, making it clear they were personally behind reform.

"Reports about government surveillance have shown there is a real need for greater disclosure and new limits on how governments collect information," said Mark Zuckerberg, the CEO of Facebook. "The U.S. government should take this opportunity to lead this reform effort and make things right."

Marissa Meyer, the chief executive at Yahoo, said the disclosures had "shaken the trust of our users."

The letter was signed by AOL Inc., Apple Inc., Facebook Inc., Google Inc., LinkedIn Corp., Microsoft Corp., Twitter Inc. and Yahoo! Inc.

Obama has asked a panel of hand-picked advisers to report on the issue this month and recently said he'll propose the NSA use "some self-restraint" in handling data. He maintains, however, that the NSA isn't interested in reading people's emails and text messages.

The technology companies have good reason to band together. The free flow of information is fundamental to their business models. Information on consumers is critical to advertisers. But consumers need to trust that their privacy concerns are safeguarded, said Joss Wright, a research fellow of the Oxford Internet Institute.

Technology companies are also concerned that governments outside the U.S., such as the European Union, might set tougher rules for businesses to protect the privacy of their citizens, Wright says.

"It's potentially huge," Wright said. "Other countries around the world could make it harder for (the companies) to carry on with unrestricted data gluttony."

That data is not just from browsing the web or cellphones. The latest reports showed U.S. and British intelligence officers have even been spying on gamers by trawling data from popular online games such as World of Warcraft.

Privacy International, a U.K.-based charity, praised the industry effort and described it as a reminder that there are gross violations of the right to privacy as governments access and share bulk metadata records.

"It is time for drastic changes to how intelligence is regulated, conducted and overseen, and we welcome these companies' contribution to this debate," Privacy International said in a statement.

Others, however, noted Silicon Valley's stance probably had more to do with profit than principle.

"It sure would have been nice if the tech companies had been loudly supporting intelligence reform before Snowden's disclosures," said Chris Soghoian, a senior analyst with the American Civil Liberties Union.

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Associated Press Writer Raphael Satter contributed to this story from London.

Associated Press Writer Marcy Gordon contributed from Washington.

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Online:

http://ReformGovernmentSurveillance.com

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Report: NSA spying on virtual worlds, online games

LONDON — American and British intelligence has been spying on gamers across the world, media outlets reported, saying that the world's most powerful espionage agencies packed virtual universes full of undercover agents and surreptitiously monitored traffic across online fantasy games such as "World of Warcraft."

Stories carried Monday by The New York Times, the Guardian, and ProPublica said U.S. and U.K. spies have spent years trawling online games for terrorists or informants. The stories, based on documents leaked by former National Security Agency contractor Edward Snowden, offer an unusual take on America's world-spanning surveillance campaign, suggesting that even the fantasy worlds popular with children, teens, and escapists of all ages aren't beyond the attention of the NSA and its British counterpart, GCHQ.

Virtual universes like "World of Warcraft" can be massively popular, drawing in millions of players who log months' worth of real-world time competing with other players for online glory, virtual treasure, and magical loot. At its height, "World of Warcraft" boasted some 12 million paying subscribers, more than the population of Greece. Other virtual worlds, like Linden Labs' "Second Life" or the various games hosted by Microsoft's Xbox — home to the popular science fiction-themed shoot-em-up "Halo" — host millions more.

Spy agencies have long worried that such games serve as a good cover for terrorists or other evildoers who could use in-game messaging systems to swap information. In one of the documents cited Monday by media outlets, the NSA warned that the games could give intelligence targets a place to "hide in plain sight."

The 82-page-document, published on The New York Times' website, also noted that opponents could use video games to recruit other users or carry out virtual weapons training — pointing to the Sept. 11, 2001, hijackers as examples of terrorists who had used flight simulation software to hone their skills.

Important details — such as how the agencies secured access to gamers' data, how many players' information was compromised, or whether Americans were swept up in the spying — were not clear, the Times and ProPublica said, but the reports point to a determined effort to infiltrate a world many people associate with adolescents and shut-ins.

At the request of GCHQ, the NSA began extracting "World of Warcraft" data from its global intelligence haul, trying to tie specific accounts and characters to Islamic extremism and arms dealing efforts, the Guardian reported. Intelligence on the fantasy world could eventually translate to real-world espionage success, one of the documents suggested, noting that "World of Warcraft" subscribers included "telecom engineers, embassy drivers, scientists, the military and other intelligence agencies."

"World of Warcraft" wasn't the only target. Another memo noted that GCHQ had "successfully been able to get the discussions between different game players on Xbox Live." Meanwhile, so many U.S. spies were roaming around "Second Life" that a special "deconfliction" unit was set up to prevent them from stepping on each other's toes.

Blizzard Activision Inc. —the company behind "World of Warcraft" — Linden Labs, and Microsoft Inc. did not immediately return messages seeking comment, although the Times cited a Blizzard spokesman as saying that any surveillance "would have been done without our knowledge or permission." GCHQ said it had no comment on the stories beside the assertion that it operated in "a strict legal and policy framework" with rigorous oversight.

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Barbara Ortutay in New York contributed to this report.

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AP Newsbreak: Schilling replaces Hershiser at ESPN

LAKE BUENA VISTA, Fla. — Curt Schilling knows criticism is coming. He expects it.

The former All-Star pitcher is replacing Orel Hershiser on ESPN's "Sunday Night Baseball" broadcast crew next season, giving him a wider audience for his opinions.

"No matter how you phrase it, if you don't compliment a player, that player's team, that's player's fans think you hate him," Schilling said Sunday. "I can't tell you how many times I've seen people react with 'You hate so-and-so. You hate so-and-so.' And it's just amazing how — it's a good thing. The passion is great. It's amazing how much people read into the things that we say on a nightly basis."

In the 25th season of "Sunday Night Baseball," Schilling will join former Philadelphia teammate John Kruk, play-by-play man Dan Shulman and reporter Buster Olney. Hershiser is expected to join the Los Angeles Dodgers' new regional sports network, the Los Angeles Times reported Sunday.

Schilling has been a studio analyst for ESPN's "Baseball Tonight" since 2010 and also has been in the booth for a few games.

Rhode Island's Economic Development Corp. has sued Schilling, former officials of his bankrupt video game company 38 Studios and some of its own former employees. The EDC board in 2010 approved a $75 million loan guarantee for the company to lure it to Providence from Massachusetts.

"People are going to believe and know and see what they want to believe and know and see," Schilling said. "Unfortunately, the whole story isn't out yet and when that does happen, hopefully people will understand."

A six-time All-Star, Schilling said he plans to bring a pitcher's perspective to the telecasts.

"When I think about the 75 to 100 decisions that went into every single pitch I threw, you can't break that down," he said. "But there's ways to explain, there's ways to help people watch that I think I can help Dan and Krucky bring to the table."

And in the first season of expanded replay for umpires' decisions, Schilling expects to have a lot to discuss.

"I'm sure I'm going to gripe and complain at some point," he said. "Probably often."

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Mass. pension board settles Alpha Appalachia suit

BOSTON — Massachusetts officials have announced a $265 million settlement with mining company Alpha Appalachia Holdings Inc. for allegedly misrepresenting its safety record in an effort to artificially inflate its stock price.

The Pension Reserves Investment Management Board, which oversees public pension investments in Massachusetts, was the lead plaintiff in a class-action lawsuit brought by multiple investors against the company formerly known as Massey Energy Co.

The plaintiffs alleged that Massey told investors it strongly adhered to proper safety procedures, but the company had a culture of safety violations, leading to an explosion at the Upper Big Branch mine in West Virginia that killed 29 people in April 2010. The investigation uncovered hundreds of safety violations, causing the company's stock to plunge.

A call to Bristol, Va.-based Alpha Appalachia was not immediately returned Monday.

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Sysco to buy US Foods for about $3.5B

HOUSTON — Sysco is buying the food distributor US Foods for about $3.5 billion in cash and stock.

Under the terms of the agreement announced Monday, Houston's Sysco will pay $3 billion in common stock and $500 million in cash. It will also assume or refinance about $4.7 billion in debt.

That puts the total value of the deal at about $8.2 billion. When the acquisition closes, Sysco will have annual sales of about $65 billion.

Sysco President and CEO Bill DeLaney said that the two companies have highly complementary core strengths including large product portfolios.

The buyout has been approved by the boards of both companies.

When the deal closes, US Foods shareholders will own about 87 million shares, or about 13 percent, of Sysco's common stock. Representatives of majority shareholders at US Foods, based just outside of Chicago in Rosemont, Ill., will join Sysco's board.

Sysco said it expects the acquisition, which is expected to close in the third calendar quarter of 2014, to immediately boost its profit after adjusting for deal related costs and expenses. It's also expected to result in annual cost savings of at least $600 million after three or four years.

Shares of Sysco Corp. jumped 30 percent in premarket trading to $44.35. That would be an all-time high if it holds when the market opens.

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US safety agency may expand Hyundai air bag recall

DETROIT — U.S. safety regulators are looking into whether a Hyundai Elantra recall should be expanded.

The National Highway Traffic Safety Administration opened a recall query to determine if 52,000 Elantra Touring cars from the 2009 through 2012 model years should be recalled.

In March, Hyundai recalled more than 186,000 Elantra compacts from the 2011 to 2013 model years because a ceiling support bracket can come loose when side air bags inflate. In one case a bracket cut a driver's ear.

The safety agency says that the 2009-2012 Elantra Touring models have a bracket design that's similar to the recalled cars.

In the recall, dealers were to install industrial adhesive strips to keep the brackets in place. The bracket design was changed in cars built after March 5, 2013.

Hyundai says it will cooperate with the investigation.

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New American Airlines emerges as deal closes

FORT WORTH, Texas — American Airlines emerged from bankruptcy protection and US Airways culminated its long pursuit of a merger partner as the two completed their deal Monday to create the world's biggest airline.

It's the latest in a series of mergers that will leave four airlines controlling more than 80 percent of the U.S. air-travel market. With less competition, the airlines have successfully limited the number of seats, boosting prices and returning to profitability.

American's old parent, AMR Corp., is gone, replaced by the new American Airlines Group Inc. CEO Doug Parker remotely rang the opening bell of the Nasdaq Stock Market, flanked on stage by executives and labor leaders of both airlines and in front of a crowd of cheering employees.

"Our goal here is to go and restore American Airlines to its position as the greatest airline in the world," Parker said. The largest airline as recently as 2008, American struggled through a decade of huge losses and fell behind United and Delta in size.

For passengers, the merger won't mean many immediate changes. Whether the deal leads to higher ticket prices, the issue at the heart of legal challenges from the government and consumer groups, remains to be seen.

Parker dismissed the notion that fewer airlines will lead to higher airfares because, he said, the new American plans to keep all the service currently offered by American and US Airways.

"Airline prices are like prices in other businesses — they track with supply and demand, and we're not reducing any of the supply," he said in an interview with The Associated Press.

Elite members of the two frequent-flier programs will get reciprocal benefits in early January, with other changes being phased in, executives said. The airlines expect to soon be able to book passengers on each other's flights, increasing the destinations available to customers of both.

It will take about two years to combine American's fleet and workforce with those of US Airways, Parker said. US Airways will join Continental, Northwest and other airlines that now exist only in the memories of employees and longtime travelers.

Airline mergers are notoriously troublesome. United has been plagued by computer-network problems since combining with Continental, leading to outages and flight delays. Airlines' technology systems handle everything from passenger information to weight and balance calculations on every flight. Then there is the difficulty in merging two sets of employees who, in this case, are represented by different unions. US Airways has been down that path before — it still hasn't fully integrated pilot crews since its merger with America West, and that deal closed in 2005.

Unions at American received Parker like a conquering hero. Their support for a merger led by US Airways executives was a turning point when AMR CEO Tom Horton still hoped to keep his airline independent. For their efforts, the unions won stock in the new company.

On Monday, Parker made symbolic moves to extend a hand to labor — painting over parking spaces once reserved for executives, and asking Nasdaq to inscribe a commemorative opening bell to the employees instead of to him. Still, the honeymoon could be a short one.

"His greatest challenge is keeping positive sentiment on his side," said Vicki Bryan, an analyst with bond-research firm Gimme Credit. "He's at the peak of 'happy' right now. He's got to keep the unions happy; he's got to keep the computers running; he's got to keep the balloon in the air."

In morning trading, new shares of American Airlines Group were up 45 cents to $24.55.

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Follow David Koenig at http://www.twitter.com/airlinewriter

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Mass gas prices continue upward climb

BOSTON — The price of a gallon of gasoline in Massachusetts is up another 3 cents, and has now jumped 13 cents in a month.

AAA Southern New England announced Monday that self-serve regular is selling for an average of $3.41 per gallon. That's 15 cents higher than the national average and 6 cents higher than the in-state price one year ago.

AAA found self-serve, regular selling for as low as $3.32 per gallon and as high as $3.59.

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Rising riches: 1 in 5 in US reaches affluence

WASHINGTON — It's not just the wealthiest 1 percent.

Fully 20 percent of U.S. adults become rich for parts of their lives, wielding outsize influence on America's economy and politics. This little-known group may pose the biggest barrier to reducing the nation's income inequality.

The growing numbers of the U.S. poor have been well documented, but survey data provided to The Associated Press detail the flip side of the record income gap — the rise of the "new rich."

Made up largely of older professionals, working married couples and more educated singles, the new rich are those with household income of $250,000 or more at some point during their working lives. That puts them, if sometimes temporarily, in the top 2 percent of earners.

Even outside periods of unusual wealth, members of this group generally hover in the $100,000-plus income range, keeping them in the top 20 percent of earners.

Companies increasingly are marketing to this rising demographic, fueling a surge of "mass luxury" products and services from premium Starbucks coffee and organic groceries to concierge medicine and VIP lanes at airports. Political parties are taking a renewed look at the up-for-grabs group, once solidly Republican.

They're not the traditional rich.

In a country where poverty is at a record high, today's new rich are notable for their sense of economic fragility. They've reached the top 2 percent, only to fall below it, in many cases. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged.

Last week, President Barack Obama asserted that growing inequality is "the defining challenge of our time," signaling that it will be a major theme for Democrats in next year's elections.

New research suggests that affluent Americans are more numerous than government data depict, encompassing 21 percent of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.

At the same time, an increasing polarization of low-wage work and high-skill jobs has left middle-income careers depleted.

"For many in this group, the American dream is not dead. They have reached affluence for parts of their lives and see it as very attainable, even if the dream has become more elusive for everyone else," says Mark Rank, a professor at Washington University in St. Louis, who calculated numbers on the affluent for a forthcoming book, "Chasing the American Dream," to be published by the Oxford University Press.

As the fastest-growing group based on take-home pay, the new rich tend to enjoy better schools, employment and gated communities, making it easier to pass on their privilege to their children.

Their success has implications for politics and policy.

The group is more liberal than lower-income groups on issues such as abortion and gay marriage, according to an analysis of General Social Survey data by the AP-NORC Center for Public Affairs Research. But when it comes to money, their views aren't so open. They're wary of any government role in closing the income gap.

In Gallup polling in October, 60 percent of people making $90,000 or more said average Americans already had "plenty of opportunity" to get ahead. Among those making less than $48,000, the share was 48 percent.

"In this country, you don't get anywhere without working hard," said James Lott, 28, a pharmacist in Renton, Wash., who adds to his six-figure salary by day-trading stocks. The son of Nigerian immigrants, Lott says he was able to get ahead by earning an advanced pharmacy degree. He makes nearly $200,000 a year.

After growing up on food stamps, Lott now splurges occasionally on nicer restaurants, Hugo Boss shoes and extended vacations to New Orleans, Atlanta and parts of Latin America. He believes government should play a role in helping the disadvantaged. But he says the poor should be encouraged to support themselves, explaining that his single mother rose out of hardship by starting a day-care business in their home.

"I definitely don't see myself as rich," says Lott, who is saving to purchase a downtown luxury condominium. That will be the case, he says, "the day I don't have to go to work every single day."

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Sometimes referred to by marketers as the "mass affluent," the new rich make up roughly 25 million U.S. households and account for nearly 40 percent of total U.S. consumer spending.

While paychecks shrank for most Americans after the 2007-2009 recession, theirs held steady or edged higher. In 2012, the top 20 percent of U.S. households took home a record 51 percent of the nation's income. The median income of this group is more than $150,000.

Once concentrated in the old-money enclaves of the Northeast, the new rich are now spread across the U.S., mostly in bigger cities and their suburbs. They include Washington, D.C.; Boston, Los Angeles, New York, San Francisco and Seattle. By race, whites are three times more likely to reach affluence than nonwhites.

Paul F. Nunes, managing director at Accenture's Institute for High Performance and Research, calls this group "the new power brokers of consumption." Because they spend just 60 percent of their before-tax income, often setting the rest aside for retirement or investing, he says their capacity to spend more will be important to a U.S. economic recovery.

In Miami, developers are betting on a growing luxury market, building higher-end malls featuring Cartier, Armani and Louis Vuitton and hoping to expand on South Florida's Bal Harbour, a favored hideaway of the rich.

"It's not that I don't have money. It's more like I don't have time," said Deborah Sponder, 57, walking her dog Ava recently along Miami's blossoming Design District. She was headed to one of her two art galleries — this one between the Emilio Pucci and Cartier stores and close to the Louis Vuitton and Hermes storefronts.

But Sponder says she doesn't consider her income of $250,000 as upper class, noting that she is paying college tuition for her three children. "Between rent, schooling and everything — it comes in and goes out."

Economists say the group's influence will only grow as middle-class families below them struggle. Corporate profits and the stock market are hitting records while the median household income of $51,000 is at its lowest since 1995. That's a boon for upper-income people who are more likely to invest in stocks.

At the same time, some 54 percent of working-age Americans will experience near-poverty for portions of their lives, hurt by globalization and the loss of well-paying manufacturing jobs.

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Both Democrats and Republicans are awakening to the political realities presented by this new demographic bubble.

Traditionally Republican, the group makes up more than 1 in 4 voters and is now more politically divided, better educated and less white and male than in the past, according to Election Day exit polls dating to the 1970s.

Sixty-nine percent of upper-income voters backed Republican Ronald Reagan and his supply-side economics of tax cuts in 1984. By 2008, Democrat Barack Obama had split their vote evenly, 49-49.

In 2012, Obama lost the group, with 54 percent backing Republican Mitt Romney. Still, Obama's performance among higher-income voters exceeded nearly every Democrat before him.

Some Democratic analysts have urged the party to tread more lightly on issues of income inequality, even after the recent election of New York City Mayor Bill de Blasio, who made the issue his top campaign priority.

In recent weeks, media attention has focused on growing liberal enthusiasm for Sen. Elizabeth Warren, D-Mass., whose push to hold banks and Wall Street accountable could stoke Occupy Wall Street-style populist anger against the rich.

"For the Democrats' part, traditional economic populism is poorly suited for affluent professionals," says Alan Abramowitz, an Emory University professor who specializes in political polarization.

The new rich includes Robert Kane, 39, of Colorado Springs, Colo.

A former stock broker who once owned three houses and voted steadfastly Republican, Kane says he was humbled after the 2008 financial meltdown, which he says exposed Wall Street's excesses. Now a senior vice president for a private equity firm specializing in the marijuana business, Kane says he's concerned about upward mobility for the poor and calls wealthy politicians such as Romney "out of touch."

But Kane, now a registered independent, draws the line when it comes to higher taxes.

"A dollar is best in your hand rather than the government's," he says.

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Associated Press Director of Polling Jennifer Agiesta, News Survey Specialist Dennis Junius, and writers Suzette Laboy in Miami and Kristen Wyatt in Denver contributed to this report.

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Feds want 10 years for fraud that preyed on dying

PROVIDENCE, R.I. — Federal prosecutors have asked a judge for a 10-year prison term for a Rhode Island lawyer who led a $46 million investment fraud that preyed on terminally ill people.

Ten years is the maximum allowed under a plea agreement signed by Joseph Caramadre, who pleaded guilty to wire fraud and conspiracy.

Prosecutors said in papers filed Monday that Caramadre deserved the sentence because of the nature of the crime and his lack of remorse. He's scheduled to be sentenced next week.

Caramadre's lawyer did not immediately return a message seeking comment.

Caramadre illegally used personal information from terminally ill people to purchase bonds and annuities that would pay out when a person died.

One of his employees also pleaded guilty.

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