2019 was a year of triumph. And tragedy. One of hope. And heartbreak. Before we embark on 2020, The Atlanta Journal-Constitution’s content curation desk is taking a look back at the biggest stories of 2019 and their effects on Georgia and the rest of the nation. Today’s topic: Business.
On Feb. 18, Payless ShoeSource filed for Chapter 11 bankruptcy protection and announced it would shutter all of its 2,500 stores in North America. The popular discount shoe chain based in Topeka, Kansas, began going-out-of-business sales at all U.S. locations a day earlier. Despite a strong economy and consumer confidence, many brick-and-mortar chains including Payless fell victim to the “retail apocalypse” — widespread store closings that started about 2010 due to the over-expansion of malls and the rise of e-commerce. According to reports, U.S. retailers closed 9,302 stores this year, a 59% jump from 2018 and the highest number since Coresight Research began tracking the data in 2012. Other major bankruptcies and store closings included Gymboree, Charlotte Russe, A.C. Moore, H&M, Fred's and Forever 21. More store closings could be on the horizon as online shopping continues to outpace purchases at physical stores.
McDonald's fired CEO Steve Easterbrook on Nov. 3 after the executive admitted he engaged in a consensual relationship with an employee, a violation of company policy. The company’s board said in a statement that Easterbrook had “demonstrated poor judgment.” Easterbrook, 52, who had served in the role since March 2015, acknowledged his transgression in an email to employees. “This was a mistake,” he wrote. “Given the values of the company, I agree with the board that it is time for me to move on.”
7. Facebook fined $5 billion
In July, the U.S. government fined Facebook $5 billion — the largest penalty in U.S. history for a privacy violation. The company was also compelled to submit to significant federal oversight of its business for years to come. The Federal Trade Commission investigated the company for 16 months beginning in 2018, uncovering massive privacy mishaps and other deceptive practices. One of the FTC's primary allegations was that Facebook failed to reveal to its 2.2 billion users that phone numbers uploaded to enhance their security would be used for advertising purposes. As part of the settlement, Facebook was ordered to fix highly publicized abuses at the company, including a March 2019 incident in which hundreds of millions of users’ passwords had been stored in plain text.
On July 29, Capital One bank announced a massive data breach that exposed the private data of 100 million credit card customers across the U.S. and another 6 million in Canada. Officials said a hacker accessed at least 100 million credit card applications and tens of thousands of Social Security numbers and bank accounts. The FBI later identified Paige A. Thompson, a Seattle software engineer, as a suspect. She was arrested and charged with computer fraud and abuse. Capital One said no credit card account numbers or login credentials were compromised, but about 140,000 Social Security numbers were, along with about 80,000 bank account numbers, names, addresses, credit scores and bank balances.
The Federal Reserve announced in October that it would slash interest rates for the third time in 2019 to spur more economic activity amid the tariff war with China. The expected quarter-point rate cut reversed nearly all of 2018’s rate increases as slowing global growth continued to be a drag on the U.S. economy despite low unemployment, low inflation and increased household spending. Federal Reserve Chairman Jerome Powell faced pressure all year from President Donald Trump on Twitter to continue cutting interest rates that were already at historically low levels. "There's plenty of risk left, but I have to say the risks seems to have subsided," Powell said after announcing the latest cut. The federal funds rate affects the cost of mortgages, credit cards and other borrowing. "Although household spending has been rising at a strong pace, business fixed investment and exports remain weak," the Fed said in a statement, noting “uncertainties” about the economic forecast.
On Oct. 30, Twitter CEO Jack Dorsey said it would ban all political advertising from its service. Before the decision, the social media company had always allowed political ads. Dorsey said Twitter's new policy prevents advertisers from posting deceptive political ads, including manipulated videos and other targeted misinformation. Dorsey also distinguished free speech from paid speech, tweeting that "if someone pays us to target and force people to see their political ad ... well...they can say whatever they want!” Earlier in the month, Facebook’s Mark Zuckerberg said politicians would continue to have the right to free speech on Facebook and that his company would not fact-check any political ads, even if they contained outright lies. The issue arose in September when Twitter, Facebook and Google refused to take down a misleading video ad from President Donald Trump's campaign that targeted former Vice President Joe Biden.
Popeyes introduced the world to a new chicken sandwich in 2019, and it didn't take long for the new menu item to become a finger-licking phenomenon. To test the market value, the restaurant rolled out the sandwiches for a limited time beginning Aug. 12 at select locations across the country, including Atlanta. Within two weeks, the sandwich completely sold out. An Aug. 19 Twitter exchange between Popeyes, Chick-fil-A and Wendy's went viral and drove up the popularity of the sandwich, giving Popeyes an estimated $23 million in free advertising, according to The Takeout. In no time, lines were spilling out the chain’s doors, fights were breaking out, and one man in Maryland was even stabbed to death after cutting to the front of the line to get one. A Tennessee man sued the fast-food chain Aug. 29, citing "false advertising and deceptive business practices." Craig Barr, of East Ridge, said he drove to several Popeyes to buy one of the sandwiches to no avail. He was told to come back later, but when he did, the sandwiches were already sold out. The chain has since added the popular sandwich to its regular menu.
In July, the U.S. Department of Justice opened a sweeping antitrust investigation of big technology companies and whether their online platforms have hurt competition, suppressed innovation or harmed consumers through data collection. After a series of scandals that compromised user privacy at Facebook, lawmakers began calling for stricter regulations or even breaking up the big tech companies, which also includes Apple, Google and Amazon. On Sept. 9, state attorneys general from more than four dozen states announced they were also beginning investigations into the market power and corporate behavior of big tech companies. In Congress, a bipartisan probe by the House Judiciary subcommittee on antitrust was also launched in 2019. Committee chairman Rep. David Cicilline called for legislative or regulatory changes but said breaking up the companies would be a last resort.
Ongoing trade tensions between the world's two largest economies took a toll on world economic growth in 2019 and caused wild swings on Wall Street as uncertainty gripped financial markets throughout much of the year. President Donald Trump began imposing tariffs on Chinese goods in 2018 in response to "unfair trade practices" and the alleged theft of intellectual property that cost the U.S. hundreds of billions of dollars a year, he said. By May, the president had raised tariffs from 10% to 25% on $200 billion of Chinese goods. And in August, Trump announced an additional 10% levy on $300 billion in Chinese products. After the U.S. Department of Treasury declared China a currency manipulator, Trump raised the stakes even further by threatening substantially higher tariffs to take effect Dec. 15. At every turn, China struck back by raising tariffs on U.S. goods and by ordering state-owned companies to stop buying U.S. agricultural products. Trump eventually postponed some of the tariffs to avoid hurting U.S. consumers during the holiday shopping season. China's retaliatory actions hit American farmers and small businesses particularly hard. The administration provided a $28 billion relief package in July. By the end of 2019, both nations announced a deal to cease any new tariffs and slash the existing levies.
Check out the other stories in our year-end project:
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