It's a sad state of affairs that a player needs to go to the ground for a thought of a penalty to be even entertained. VAR was a great opportunity to amend that, but due to how unpopular it already is, it's not surprising they were reluctant to push for even more strictness, adding even more penalties (which would be bound to happen, at least in the short term). Angry grandpas would riot about it.
The thought of something being both a dive and a penalty seems absurd to people because they think those two things are antithetic, but this was a case of just that. He gets fouled initially, but the foul isn't forceful enough to knock him off balance so he then throws himself to the ground in the most shameless manner possible. It's as clear a dive as you'll see, but that doesn't mean he wasn't fouled initially. And if he was fouled it's a penalty.