The daily business briefing: July 25, 2019

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1. FTC hits Facebook with record $5 billion fine in privacy settlement
2. Tesla shares plunge after bigger-than-expected losses
3. ESPN: Zion Williamson's shoe deal richest ever for an NBA rookie
4. Mnuchin says Amazon has 'destroyed' retail industry
5. Stock futures mixed ahead of next wave of earnings reports

published 25 July 2019

1. FTC hits Facebook with record $5 billion fine in privacy settlement

The Federal Trade Commission on Wednesday hit Facebook with a record $5 billion fine and ordered the social media giant to step up oversight of its handling of user data. The moves were part of a settlement over allegations that Facebook deceived users about their control over the privacy of their personal information. Hours after the announcement, Facebook revealed that it was under an antitrust investigation by the FTC. Facebook said it learned of the inquiry in June. On Tuesday, the Department of Justice announced an antitrust review involving big tech companies. It didn't specify which ones it was targeting, but Apple, Amazon, Facebook, and Google all have faced questions about whether their practices unfairly squelched competition.

Tesla shares dropped by 10 percent in after-hours trading on Wednesday after the electric car maker reported a larger-than-expected quarterly loss. The company said after trading closed that it lost $1.12 per share, considerably worse than the 39-cent-per-share loss analysts had expected. Revenue came in at $6.35 billion, short of the $6.47 billion consensus estimate. Tesla did reaffirm its guidance on full-year deliveries, saying it still sees sales of 360,000 to 400,000 vehicles for all of 2019. Most of the deliveries will be new mass-market Model 3 sedans. Tesla delivered 158,200 cars in the first half of the year, so it will have to exceed 200,000 in the rest of the year to hit its mark.

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The endorsement deal secured by Zion Williamson, the New Orleans Pelicans' No. 1 overall pick in the NBA draft, is the richest shoe deal ever for an NBA rookie, ESPN reported Wednesday. Williamson announced Tuesday that he had struck a five-year agreement with Jordan Brand, but he didn't immediately provide details. Jordan Brand battled numerous other shoe companies to sign Williamson, who played one-year at Duke and was named the nation's top men's college basketball player and its top freshman. Williamson reportedly had several offers of more than $10 million per year. Before Williamson signed with Jordan Brands, LeBron James had the richest rookie shoe contract in NBA history.

Treasury Secretary Steven Mnuchin said Wednesday that Amazon has "destroyed the retail industry across the United States." Mnuchin said he was eagerly awaiting the conclusions of a newly announced Department of Justice investigation into whether big technology firms unfairly stifle competition. "It's absolutely right the attorney general is looking into these issues and I look forward to listening to his recommendations to the president," Mnuchin said. The Trump administration hasn't identified the companies it is targeting. Amazon, the leading online retailer, defended itself by noting that 90 percent of sales take place in brick-and-mortar stores. "Today, independent sellers make up more than 58 percent of physical gross merchandise sales on Amazon, and their sales have grown twice as fast as our own," an Amazon spokesman said.

U.S. stock index futures struggled for footing early Thursday ahead of another batch of corporate earnings reports. The main U.S. indexes were mixed. Futures for the Dow Jones Industrial Average rose by 0.2 percent as 3M and Facebook shares gained after the companies reported better-than-expected quarterly earnings. Futures of the S&P 500 and the Nasdaq were down by less than 0.1 percent and 0.4 percent, respectively. Also on Thursday, investors will be reacting to the European Central Bank's decision to keep interest rates unchanged while signaling future rate cuts. The S&P 500 and Nasdaq Composite hit record highs on Wednesday as chip stocks rose, while the Dow fell by 0.3 percent, weighed down by disappointing earnings from Boeing and Caterpillar.

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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.